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December 20, 2021 • Vol. 99 No. 24
Contents News & Markets
8
Special Report
20
Idea Exchange
36
Heading Into 2022, P/C Insurers Face ‘Massive’ Political Risks, Economic Uncertainty
Special Report: The View for 2022: P/C Insurance Predictions and Trends
The Competitive Advantage: Is Selling Insurance a Profession?
Construction Industry Faces ‘New Age’ Risks Along with Strong Growth Outlook
Closer Look: Insurance Agents Eye Changes to Support Growth in 2022
Ask the Insurance Recruiter: 12 Hiring and Recruiting Ideas for Insurance Organizations
12 14
M&A Insurance Rates Nearly Double After Explosion of Dealmaking During Pandemic
15
Wholesale Brokers Look to Continue Offering Value While Addressing Talent Gap
26 Wells Media Group
Transitions Ownership to Its Employees
27
Are Too Many Comp Claims Being Opposed? Some Major Employers Think So
24 25
Closer Look: 2022 Holds Promise for Insurance Agents and Digital Carriers
38 39
Returning to the Office During a Pandemic
40
28
The COVID Era: Finding Opportunity in Times of Hardship
35
The Wedge: Why Sales Leaders Fail to Increase Sales (and 7 Things to Do About It)
Special Report: The Charity Issue – Photos of Giving Special Report: National Insurance Industry Council Pressed on Though Pandemic to Help City of Hope
42 44
Minding Your Business: Industry Trends to Exploit for 2022
50
Closing Quote: Charitable Giving in 2021: A Year of Rising to Meet New Challenges
Departments
6 Opening Note
4 | INSURANCE JOURNAL | DECEMBER 20, 2021
10 Declarations
11 Figures
16 Business Moves
18 People
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Opening Note Write the Editor: awells@insurancejournal.com
Publisher Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com
ADMINISTRATION / CIRCULATION
Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com
Giving Back, Giving Together
EDITORIAL
T
his is the 9th year that Insurance Journal editors have the pleasure of publishing the very best news in the industry — the good news about good deeds happening across the world thanks to dedicated insurance industry professionals. We have enjoyed pulling together this special issue of Insurance Journal — The Charity Issue — that is filled with stories of charitable efforts by agents, brokers and carrier partners. It’s always a difficult task to narrow down the stories to a number we could fit in this report, but it a challenge we treasure. While the insurance industry financially supports many worthy causes year-round, insurance professionals often give much more than dollars. Sharing of money and time is not only important to the charity but it’s critical to those who are giving, too. Studies show that giving can actually boost your physical and mental health. Volunteering provides a sense of purpose and teaches valuable skills while strengthening existing relationships and creating new ones. But this isn’t news to the insurance industry or to Insurance Journal. Countless agencies, brokerages and insurance companies give their employees paid time off to volunteer and help nonprofit organizations raise the funds necessary to support their organizations’ efforts. Supporting the community is a team effort, says Darren Cartwright, claims practice leader, senior vice president at Woodruff Sawyer. Cartwright serves as the chair for the WS’s CARE program, which stands for “Community, Action, Responsibility, Enhancement,” he said. CARE supports nonprofit organizations through monetary contributions and volunteer service. “Each of our geographic areas has its own unit for CARE, led by one or two individuals, and then we have a national CARE,” Cartwright said. This approach allows the agency to help local efforts, as well as one larger national effort. This year, the national focus was hunger with a goal to provide $25,000 to Feeding America by year-end. Working together as a team in different geographic regions is part of the fun, Cartwright said. “Activities where you can get people out and together as a team gets people motivated.” This year, WS boosted giving morale by implementing a TikTok contest. “For every $500 donation milestone reached, a video of one our WS leaders was released on our internal Slack account,” he said. This is just one of many stories of charitable deeds done by the insurance industry. We hope you will be inspired like we have been over the years by the industry’s generosity and kindness. And to all of you who have given and will continue to give, thank you. Best wishes to our Insurance Journal readers for a healthy and prosperous 2022!
‘Volunteering provides a sense of purpose and teaches valuable skills while strengthening existing relationships and creating new ones.’
Andrea Wells Editor-in-Chief 6 | INSURANCE JOURNAL | DECEMBER 20, 2021
Chief Content Officer Andrew Simpson | asimpson@insurancejournal.com Editor-in-Chief Andrea Wells | awells@insurancejournal.com East Editor Elizabeth Blosfield | eblosfield@insurancejournal.com Southeast Editor William Rabb | wrabb@insurancejournal.com South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor L.S. Howard | lhoward@insurancejournal.com Columnists & Contributors Columnists: Chris Burand, Tony Caldwell, Mary Newgard, Catherine Oak, Bill Schoeffler, Randy Schwantz Contributors: Mark Hollmer, Stephanie Jones, Amy K. O’Connor, Bill Ross, Dr. Adam Seidner, Robert Sullivan
SALES / MARKETING
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DESIGN / WEB / VIDEO
V.P. of Design Guy Boccia | gboccia@insurancejournal.com V.P. of Web Josh Whitlow | jwhitlow@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Ryan Kleshinski | rkleshinski@wellsmedia.com New Media Producer Bobbie Dodge | bdodge@insurancejournal.com Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com
ACADEMY OF INSURANCE
Director Patrick Wraight | pwraight@ijacademy.com Online Training Coordinator George Jack | gjack@ijacademy.com
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News & Markets Heading Into 2022, P/C Insurers Face ‘Massive’ Political Risks, Economic Uncertainty casualty insurance industry performance is in line with past behavior during recoveries. “We actually lag a bit when we emerge from a recession,” Leonard said. As strong as the P/C insurance industry’s 2021 growth was, it was “insufficient” to fully make up for the pandemic contraction, Leonard explained. COVID could still cause problems, he noted. A resurgence of the virus could push recovery into 2024-2025, he added.
Not the Same Market
By Mark Hollmer
P
roperty/casualty insurers head into 2022 facing “massive” political risks, an expert with the Insurance Information Institute said on Dec. 2. Economic uncertainty will also continue despite recovery trends. Some exist due to post-pandemic economic fallout, but many others are longstanding or worsening flashpoints in the U.S. and around the globe, noted Michel Leonard, vice president, senior economist and data scientist, and head of the Economics and Analytics Department at III. He spoke during the III Joint Industry Forum 2021 in New York City. Those risks, when listed together, are substantial. In the U.S., they include labor dislocation and the midterm elections, the continued institutional deadlock in Congress, worsening socioeconomic inequality and far right domestic radicalization. In the U.S. and around the world, these risks encompass anti-vax radicalization relating to the COVID-19 vaccines, far-left industrial sabotage relating to fossil fuels, and conflict with China over Taiwan and Hong Kong. Other flashpoint risks remain or are worsening in North Korea, 8 | INSURANCE JOURNAL | DECEMBER 20, 2021
Ukraine, Belarus, Latvia, India, China and Pakistan, Leonard noted. Beyond that, there are also risks involving weaponized trade policies, state-sponsored cyber terrorism and warfare, and risks involving state and non-state interference in elections both in the U.S. and abroad.
Immediate Problems
More immediately, economic risks remain as the U.S. and world struggle to recover from disruption caused by the coronavirus pandemic, including inflation caused by supply chain disruptions and labor shortages. Leonard said economic improvement will continue in 2022 as the economy begins to normalize and core inflation and transitory inflation on goods and services subsides. But it will take at least two more years to return to normal growth trends. “We had a strong year but we’re still behind in terms of growth,” Leonard said. “You can’t have runaway inflation and growth.” He added that goods subjected to supply chain delays will take at least two more years to correct, as well as labor shortages. Still, as Leonard noted, the property/
So far, the economic recovery has been uneven in the U.S., with broken supply chains and a dislocated workforce causing a drop in construction completion and motor vehicle sales. That will continue into 2020, Leonard said, which means insurers won’t be selecting business with a primary focus on geography. Expectations are that there will be “blockbuster growth” in 2022-2023 for the construction and auto sectors, once supply chain and labor disruptions subside. That will create both opportunity and pressure for insurers as they adapt to changing conditions. Moving ahead, Leonard cautions that inflation will no longer be an accurate economic barometer on its own as insurers consider their underwriting priorities. When planning for inflation, Leonard said goods must be now be divided between those made domestically and products coming from overseas. Distribution challenges have changed price increase trends for both, favoring those produced domestically. Also, supply chain and labor disruptions will permanently change how the consumer price index factors, as well as insurance replacement costs, he added. There is a big divide emerging in individual states, where rural areas see lower inflation and urban locales face higher price hikes. This will continue, Leonard said, complicating the climate for insurers as they calculate the risks and pricing involved. INSURANCEJOURNAL.COM
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Figures
$2.5 Billion
The amount Louisiana residents and businesses have received in federal aid related to Hurricane Ida. FEMA said another $27.8 million has been approved in public assistance grants for local governments and nonprofits. The aid includes $1.1 billion in low-interest loans from the Small Business Administration, $580 million in housing assistance to renters and homeowners and $513 million in paid claims from the National Flood Insurance Program.
$35K
A Bronx, New York, man has been indicted on grand larceny, insurance fraud and additional charges for falsely claiming he was fully disabled and unable to work at his state job so he could collect more than this amount in workers’ compensation. The defendant, James Garner, was arraigned before Bronx Supreme Court Justice Efrain Alvarado.
$400 The per-vehicle refund amount Michigan drivers will receive after Gov. Gretchen Whitmer demanded insured drivers be compensated for a multi-billion dollar surplus in the Michigan Catastrophic Care Association Fund. The fund, which is overseen by a board primarily made up of insurance companies, had quickly agreed to issue refunds but waited to release details. The refund will go into effect in 2022.
10 | INSURANCE JOURNAL | DECEMBER 20, 2021
$60 Million
That’s how much one of the largest U.S. health insurance companies and its branches in Nevada were found liable in punitive damages for underpaying out-of-network emergency medical providers, a state court jury ruled.
INSURANCEJOURNAL.COM
Declarations
Slow Payments
“The number one complaint is delays: slow-pay and no-pay.”
— Doug Quinn, executive director of the nonprofit watchdog group the American Policyholder Association, told Louisiana lawmakers that homeowners are still waiting to get insurance payments for Hurricane Ida damage. State lawmakers held a Dec. 1 meeting to discuss the response from insurers, some of whom haven’t made payment offers more than three months after Ida struck southeastern parishes. Two of the state’s largest insurers, State Farm Insurance and Allstate Insurance Company, said they have closed about 82% of damage claims filed from Ida.
Condo Evacuation
A Toxic Legacy
— Waukesha Police Lt. Kevin Rice on the evacuation of a six-story condominium building that was the subject of resident complaints dating back to June 2020 after engineers found the building was in imminent danger of collapsing. A total of 65 people were evacuated from the 48-unit Horizon West condominium in the Milwaukee suburb. The city said that it had closed down all balconies in the summer of 2020 after a complaint over structural issues. After attempts to rectify the situation were unsuccessful, the condominium association began removing the balconies last month.
— Maryland Attorney General Brian Frosh said in a statement regarding a lawsuit he filed against chemical company Monsanto and two spinoffs. The lawsuit alleges chemicals Monsanto manufactured harmed the state’s waters, fish and wildlife and seeking to recover damages and clean-up costs.
“We’re trying to avoid a ‘Florida.’”
“Monsanto’s toxic legacy lives on. Until today, Marylanders have borne the cost of cleaning up these poisons. It is time for Monsanto to take full responsibility.”
Great Growth, Great Risk
“If you achieve your economic development goals, which I have no doubt you will, you will have a nearly $1 trillion insured loss exposure.” “Can the supply of insurance keep up with the growth? The answer is ‘no,’ currently, in the private market.”
— The first quote was from John Seo, managing director of Fermat Capital Management, about how Florida’s projected growth will bring in four million more people in the next decade, and they will be concentrated in metropolitan areas, which increases risk if a hurricane strikes. The last part was from Chris Dittman, senior managing director at Aon, the multinational insurance provider. Both spoke at the Florida Chamber of Commerce’s Insurance Summit in Tampa in early December.
INSURANCEJOURNAL.COM
Noncompliant Robotaxis
“Together, the Cruise Videos document 14 total stops for pick up or drop off of passengers; they provide evidence that not a single one of these stops complied with the requirements of the Vehicle Code and Transportation Code.”
— The San Francisco Municipal Transportation Agency said in a 24-page letter that the recent videos from Cruise show the self-driving technology company’s robotaxi rides result in unlawful behavior that also endangers people nearby and slows down buses. DECEMBER 20, 2021 INSURANCE JOURNAL | 11
News & Markets Construction Industry Faces ‘New Age’ Risks Along with Strong Growth Outlook
T
he global construction industry’s risk landscape will be transformed by radical changes in design, materials and processes as the industry enters a sustained period of strong growth. The post-Covid-19 growth will be driven by government spending on infrastructure and the transition to a net zero society, according to experts from Allianz Global Corporate & Specialty (AGCS) in their report, Managing The New Age Of Construction Risk, which explores risk trends for the construction sector. Meanwhile, the construction risk landscape will be affected by the move to more sustainable buildings and infrastructure, the upscaling of clean energy facilities and the adoption of modern building methods. These challenges will add to currently-stressed supply chains, shortages in materials and labor, and increased costs, which all come against the backdrop of years-long tight margins in the industry, the report adds. Current shortage of materials and skilled labor add to long-term challenges around new design, materials and building methods driven by sustainability and net zero strategies. AGCS analysis of €11 billion worth of construction and engineering claims identifies top causes of loss by value: fire and explosion (26%), faulty design/poor workmanship (20%) and natural hazards (20%). Construction companies need to improve cyber resilience and protect buildings sites against flash flooding and other extreme weather events driven by climate change. “Out of hours” water damage is a major source of loss. “Covid-19 has brought about a new age for the construction industry,” says Yann Dreyer, Global Practice Group leader for Construction in the global Energy & Construction team at AGCS. “While construction projects continued during the pandemic, and further growth is to come, the overall environment has 12 | INSURANCE JOURNAL | DECEMBER 20, 2021
changed fundamentally.” Dryer said cost-cutting strategies and new technologies and designs may well result in accelerated risks for construction companies and insurers alike. “Continued risk monitoring and management controls will be key moving forward,” he said. Investments in infrastructure and energy, along with rising populations in emerging markets, support a growth outlook. The report maintains that a shift to electric transport will require investment in new plants, battery manufacturing facilities and charging infrastructure. Buildings not only will be expected to improve their carbon footprint, but will also require improved coastal and flood defenses, and sewage and drainage systems. Governments in many countries are planning major public investments in large infrastructure projects. In the U.S., a $1 trillion infrastructure package touches everything from bridges and roads to the nation’s broadband, water and energy systems. At the same time, the U.S. has announced plans to invest in a number of large infrastructure projects around the world in 2022 in response to China’s ambitious Belt And Road Initiative, which could stretch from East Asia to Europe. Four countries — China, India, U.S. and Indonesia — are expected to account for almost 60% of global growth in construction over the next decade, according to the Allianz report.
Downsides of the Boom
The expected boom brings specific challenges in addition to benefits. In the medium term, sudden surges in demand could exacerbate existing shortages of materials and skilled labor, causing schedule and cost overruns. In addition, many in the industry may accelerate efficiency and cost-control measures if profit margins have been impacted in the Covid-19 economy, which can often impair quality and maintenance levels and increase
susceptibility to errors, the report warns. Analysis by AGCS shows that design defects and poor workmanship are among the leading causes of construction and engineering losses, accounting for around 20% of the value of almost 30,000 industry claims examined between 2016 and the end of 2020. The enhanced sustainability and net zero focus will strongly influence the traditional risk landscape in the construction sector. According to the UN Environment Programme, buildings and the construction industry account for 38% of all energy-related carbon dioxide emissions. In order to cut carbon emissions, existing buildings will need to be refurbished and repurposed. Additionally, the market will require new materials and construction methods, which may invite an increased risk of defects or create unexpected safety, environmental or health consequences. For example, the report continues, the increasing use of timber in construction has implications for fire and water damage risks. AGCS claims analysis shows that fire and explosion incidents already account for more than a quarter (26%) of the value of construction and engineering claims over the past five years — the most expensive cause of loss.
Upscaling Clean Energy
AGCS experts also advise that expanding clean energy brings new risks, too. Offshore wind projects are growing in size, moving further out to sea and into deeper waters, meaning the costs associated with any delays or repairs is increasing. Offshore wind farms, as well as onshore wind and solar projects, can also be exposed to serial losses. A design or manufacturing fault in a turbine, for example, can impact many projects. According to AGCS, there have already been large claims from faulty foundations in solar parks and farms. Repairs to undersea cables can take more than a year. An INSURANCEJOURNAL.COM
offshore converter station alone can cost as much as $1.5 billion, comparable to an oil rig. “Huge investments in green energy will mean larger values at risk, while the rapid adoption of prototype technology, buildings methods and materials will require close cooperation between underwriting, claims and risk engineering in-house, as well as between insurers and their clients,” says Olivier Daussin, Construction Underwriting lead in AGCS’ global Energy & Construction team.
Modular Construction
Ultimately, modern building and production methods have the potential to radically transform construction, transferring more risk offsite and incorporating greater use of technology. Modular construction in particular provides many benefits such as controlled factory-based quality management, less construction waste, a construction timeline cut in half compared to traditional methods, and reduced disruption to the surrounding environment. However, it also raises risk concerns about repetitive loss scenarios. “There is an increased risk of serial losses with modular and prefabricated methods as the same part could be used across several projects before a fault is discovered,” Daussin explains. The shortage of skilled labor in the construction industry is likely to further the trend towards offsite manufacturing and automation. At the same time, digitalization of construction creates cyber exposures, which engineering and building companies need to strengthen their defenses against.
struction. AGCS says it has seen a number of surprisingly large losses from leaks from pressurized water or fire systems that go undetected or occur out of business hours, on weekends or during periods when site personnel are not present. Water leak detection and monitoring systems can help reduce the frequency and severity of water damage, mitigating expensive repairs and project delays.
Building Site Damages
Construction sites themselves also need to pay more consideration to mitigating the impact of climate-driven events, such as wildfires, flash flooding and landslides. AGCS claims analysis shows that natural hazards are the second most expensive cause of construction losses, behind fire and explosion, accounting for 20% of the value of claims over the past five years. Meanwhile, water damage continues to be a major source of loss during conINSURANCEJOURNAL.COM
DECEMBER 20, 2021 INSURANCE JOURNAL | 13
News & Markets M&A Insurance Rates Nearly Double After Explosion of Dealmaking During Pandemic By Carolyn Cohn
T
he cost of insurance to cover problems involving M&A has nearly doubled in just two years, underwriters and brokers said, after an explosion of global dealmaking during the COVID-19 pandemic. Potential buyers take out insurance to protect against issues such as misrepresentation by a target of its performance or order book, while sellers buy cover to ensure a clean exit. After years of falling rates due to tough competition, 2021 was the first in which M&A insurance rates have risen since the market began more than two decades ago, Andrew Johnson, director of M&A at broker Paragon, said. Some in the insurance industry said a lack of due diligence has led to a spike in claims, while the boom in mergers and acquisitions has translated into steeply higher premiums. “From August/September last year, we saw incredible deal volumes, that has encouraged insurers to raise rates,” said James Swan, a partner at insurance broker McGill and Partners. Global M&A activity hit a record $4.33 trillion in the first nine months of 2021, leaping 97% from $2.2 trillion scored in the first nine months of a pandemic-hit 2020, as firms positioned themselves for life after COVID. The M&A insurance market has risen to more than $5 billion from less than $3 billion a year ago, Swan said, adding that a contract he was working on in Europe was priced at around 1.9% of the cover available, up from around 1% a couple of years ago. Caroline Rowlands, an executive director at insurance broker Howden, said rates for some deals in Britain had risen to 1.5% of the cover provided, from 1% previously. And William Monat, global head of 14 | INSURANCE JOURNAL | DECEMBER 20, 2021
transactional liability at insurer Mosaic, said rates for some U.S. deals had risen to around 4% of cover from below 3% previously.
Cutting Corners?
Where M&A insurance had previously been bought predominantly by private equity firms, corporates were increasing the amount of cover they buy, industry sources say.
The M&A insurance market has risen to more than $5 billion from less than $3 billion a year ago. And COVID led to claims coming through sooner, said Rowan Bamford, president of Liberty Global Transactions Solutions. “With the pandemic and issues around doing proper diligence on businesses, perhaps there’s been some corner-cutting on process,” he said, adding that buyers
were not able to visit businesses easily due to restrictions, while competition for deals may have encouraged haste. The time to complete due diligence was sometimes compressed by more than half, Liberty said in a recent report. Adrian Furlonge, partner at Hemsley Wynne Furlonge, said that on a couple of M&A deals the broker had received notification of a possible claim very soon after closing, suggesting there may have been insufficient research in advance. “Everybody has been doing too much in too small a timeframe,” Furlonge said. Manufacturing and healthcare were among sectors which had seen a large number of claims, industry sources said, with workforce and supply chain problems meaning companies could not always produce what they had promised. Most M&A insurance disputes are settled behind closed doors and only become public if arbitration fails. But that has not yet arisen for claims since the pandemic began, sources said.
Copyright 2021 Reuters. INSURANCEJOURNAL.COM
News & Markets Wholesale Brokers Look to Continue Offering Value While Addressing Talent Gap By Amy K. O’Connor
T
he wholesale insurance market continues to grow premiums while providing value to retail agents and important options to their customers, according to a report commissioned by the Wholesale and Specialty Insurance Association (WSIA). But the segment must face the challenge of sustaining that growth by addressing the ever-growing talent gap, says the association’s executive director Brady Kelley. Brady Kelley Though the wholesale industry experienced a slight dip in premium last year, mostly due to lost premium from small business shutdowns during the COVID-19 pandemic, other insurance lines made up for it, thanks to a strong economy, Kelley said. The WSIA 2021 Midyear Report of the U.S. Surplus Lines Service and Stamping Offices showed a 21.9% increase in surplus lines premium, and a 7.2% increase in transactions compared with the same period in 2020. “With economic growth comes insurable risks and opportunities … and you’ve got the standard market whose appetite for certain levels of risk is changing and reducing,” Kelley said. “That’s obviously where our market comes in and serves as a pipeline and somewhat of a safety valve for those risks that can’t be written on the standard basis anymore.” The association held its annual convention in San Diego in November for the first time in two years. WSIA presented information at the event that it will use to educate retailers and risk managers on the value of utilizing wholesale brokers. INSURANCEJOURNAL.COM
Agents shouldn’t be deterred from using wholesalers because of concerns that doing so increases the cost for their insureds, Kelley said, pointing to a recent analysis by Conning Inc.’s Insurance Research Division that shows the opposite is true. The analysis, which WSIA commissioned, compared the distribution costs, cost structure and ratios between the wholesale and retail channels from 2016 to 2020. It found that the total nonloss cost ratio of distributing commercial insurance policies through wholesalers was 1.8% points lower than the retail side. Kelley said WSIA first asked Conning to do the study back in 2016 to debunk the myth that using a wholesaler makes the transaction more expensive.
'With economic growth comes insurable risks and opportunities.' “A lot of value comes from that wholesale distribution partner and at no extra cost,” he said. “So that’s kind of our bottom line — if there’s a retailer out there that doesn’t have a wholesale relationship, there are a lot of reasons they should.” Kelley said the wholesale industry is also focused on finding ways to address what he called “evolving” risks where the standard market is pulling back capacity. Right now, these risks include cyber, new construction and commercial auto. State insurance regulators are engaging the wholesale and excess and surplus lines
market more than ever, as they seek to eliminate barriers to coverage for people in their states, Kelley said. For example, at least 18 states have put flood insurance on their export lists or removed some of the diligent efforts requirements for placing flood risk so consumers can access the private market, he said. “They see it as the market that provides solutions for them,” he said. Recent consolidations in the wholesale market are an indicator of capital interest in the segment because it is so high performing, Kelly said. But to sustain that growth, the wholesale industry has one very important hurdle to overcome — the talent gap — and that’s a big challenge at the moment. “Everybody’s talking about talent and the need for talent is higher right now than ever,” he said. The association is launching new diversity initiatives, such as the WSIA Diversity Foundation, designed to help attract new people to insurance careers, particularly young people exploring college degree programs. Getting young people to consider working in insurance can be a hard sell, he said, so the association is highlighting the different career paths available and the unique things people can do. And, educating them on the fact that selling insurance is about more than just selling a piece of paper, he said. “They’re selling a promise, and that promise is to protect things and protect people, and that’s what this business does,” he said. “As soon as students hear that kind of stuff ... they’re hooked.” DECEMBER 20, 2021 INSURANCE JOURNAL | 15
Business Moves The Hilb Group, Clark & Lavey Benefits Solutions
National
Zywave, ClarionDoor
Milwaukee-based Insurance technology firm Zywave has acquired Santa Barbara, Calif.-based ClarionDoor, a seller of insurance product distribution software for the property/casualty market. Zywave said ClarionDoor’s digital distribution products for carriers and managing general agencies complement its own configure, price, and quote programs for insurance agencies and brokers, creating a complete suite of products for insurance carriers and distributors, from rating and quoting through presentation to binding and issuance. ClarionDoor serves more than 75 customers globally across all P/C lines ranging from traditional lines to emerging markets such as cannabis and cyber insurance. ClarionDoor’s products are built for the cloud with an API-first architecture. The company has offices in Santa Barbara and Philadelphia. The ClarionDoor acquisition is the latest by Zywave in the insurance distribution process.
East
Risk, Meeker Sharkey & Hurley
Risk Strategies, a national specialty insurance brokerage and risk management firm, acquired insurance and employee benefits agency Meeker Sharkey & Hurley. Meeker Sharkey & Hurley provides consultative risk management and insurance services across all lines of business with 16 | INSURANCE JOURNAL | DECEMBER 20, 2021
specialties in non-profit organizations, financial institutions, manufacturing and distribution, public entities, higher education and high-net worth individuals, among others. With locations in Basking Ridge and Cranford, New Jersey, the firm is established with clients in the tri-state area. Meeker Sharkey & Hurley’s roots can be traced back to 1864 to the W.H. Meeker Company. In 2014, the firm merged with the James F. Hurley Insurance Agency and became known as Meeker Sharkey & Hurley. Meeker Sharkey & Hurley is the third New Jersey-based acquisition for Risk Strategies in the fourth quarter this year.
Alera, Customized Benefit Solutions
Alera Group, an independent, national insurance and wealth management firm, acquired Customized Benefit Solutions Inc., an employee benefits and insurance firm based in Hightstown, New Jersey. CBSI provides group employee benefits, Medicare enrollment, payroll processing and management and individual plans with including group health insurance, dental, vision and group life. Alera Group offers employee benefits, property/casualty, retirement services and wealth management to clients nationwide. CBSI joins Alera Group through CRISP, an Alera Group company in New Jersey. The CBSI team will continue serving clients in existing roles. CBSI was represented and advised on the transaction by Helfer & Associates LLC, located in Englewood, New Jersey.
The Hilb Group acquired Clark & Lavey Benefits Solutions Inc., increasing its New England presence and bolstering its range of employee benefits offerings nationwide. Based in Merrimack, New Hampshire, Clark & Lavey Benefits Solutions has a team of licensed advisors to meet client needs through employee benefits products and services. Agency Principal Paul Clark and his team will join the Hilb Group’s New England regional operations. The acquisition includes InCap, Clark & Lavey’s medical captive solution. InCap provides an alternative to traditional health insurance plans that offers additional control and helps to lower costs and reduce risks, as well as annual profit distributions to member companies. The Hilb Group is a property/casualty and employee benefits insurance brokerage and advisory firm headquartered in Richmond, Virginia. It is a portfolio company of The Carlyle Group, a global investment firm. The company has completed more than 120 acquisitions and now has more than 100 offices in 22 states.
South Central BRP Group, Arcana
BRP Group Inc. announced that Millennial Specialty Insurance LLC, an indirect subsidiary of BRP Group, has acquired substantially all of the assets of Arcana Insurance Services, LP , a Dallas, Texas-based national insurance agency and program administrator, focused on better serving the real estate investor and property management markets. Arcana will bring to BRP Group product capabilities in the single-family real estate market, which has powered strong organic growth over Arcana’s history. Arcana generates annual revenues of approximately $3.6 million MarshBerry acted as exclusive financial advisor to Arcana in the transaction.
Hub, Cameron Investment Company
Hub International Limited, a global insurance brokerage and financial services firm, has acquired Cameron Investment INSURANCEJOURNAL.COM
Company, Inc., d/b/a Shepard Walton King Insurance Group. Headquartered in McAllen, Texas, Shepard Walton King provides clients with business and personal insurance in various industries, including agribusiness, real estate and education, which supports Hub’s Specialty practices by complementing and strengthening its existing capabilities. Raul Cabaza III, President, and the Shepard Walton King team will join Hub Texas. Reagan Consulting served as financial advisor to Shepard Walton King in the transaction.
Southeast Universal
Universal Holdings, parent company of Universal Property and Casualty Insurance Co., Florida’s largest private P&C carrier, announced it had placed $100 million in notes to aid in future growth plans. The oversubscribed private placement was for 5.625% senior unsecured notes that are due in 2026, the publicly traded company said in a news release. Universal (NYSE: UVE) plans to use the proceeds for general corporate purposes and as capital for growth. It noted that primary rate increases continue to earn for the company’s book of business. Piper Sandler & Co. served as sole placement agent for the placement. Gibson, Dunn & Crutcher was legal counsel to the holding company, and the Mayer Brown law firm served as counsel to the placement agent. The notes have not been registered under the Securities Act, or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption, the news release said.
Hillcrest, Renaissance
Hillcrest Insurance Agency in Mount Dora, Florida, is now part of the Renaissance Alliance, a network of independent agencies. Hillcrest offers coverage for construction, homeowners’ associations, restaurants, houses of worship and campgrounds. INSURANCEJOURNAL.COM
Renaissance, with offices in Southborough, Massachusetts, and Miramar, Florida, has made a name for itself with rapid growth, signing up 57 agencies in the country in the past two years, through its agency growth engine model. The firm said the model helps agencies grow premium and scale operations.
Buckle, Amwins
Buckle, a technology-based financial services company, has entered into a managing general agency agreement with Amwins Specialty Auto to place non-standard automobile insurance for gig workers in Florida. Gateway Insurance will be the admitted carrier, Buckle said in a news release. The move is part of Buckle’s effort to bring a range of benefits and financial products to gig-economy workers who aren’t considered employees and don’t receive corporate benefits. Through Amwins’ agency network, the Buckle/ Gateway non-standard auto coverage will be issued on new business starting this week. The gig auto insurance product will be rolled out next year, the company said. Buckle’s gig auto insurance for rideshare and delivery drivers uses data from ride-share platforms to underwrite policies. By using that, instead of credit scores, Buckle said it helps close the gap created by conventional insurance policies that leave gig workers underinsured or with higher premiums.
West
Risk Strategies, Fournier Group
Risk Strategies acquired Fournier Group in Portland, Oregon. Fournier Group is a commercial and personal lines retail insurance agency led by President Greg Kuhns. In 2018, Fournier Group acquired Aircraft & Marine, an aviation insurance agency in Washington. It acquired Casswood Insurance Agency in 2019, adding expertise in entertainment insurance as well as New York and California operations. Risk Strategies is a specialty national
insurance brokerage and risk management firm offering risk management advice and insurance and reinsurance placement for property/casualty, employee benefits, and private client risks.
Leavitt Group, SCS
Leavitt Group Northwest acquired the employee benefits division of the SCS Insurance in Bellevue, Washington. The acquisition brings a staff of six, with Chris Allen at the helm. Allen was and will remain director of the EB business that comes along with SCS. Leavitt Group Northwest six locations in and around the Seattle area and are part of the national Leavitt Group family of brokerage firms.
Monarch E&S, Anderson & Murison
Monarch E&S Insurance Services, a division of Specialty Program Group LLC, acquired the assets of Anderson & Murison Inc. in Los Angeles, California. A&M is a national surplus lines broker and underwriter of specialty commercial and personal lines insurance risks. Monarch E&S is an MGA and wholesale broker. Specialty Program Group is a licensed holding company established to acquire and scale insurance underwriting facilities and specialty businesses throughout North America.
Hub, Shattuck & Grummett
Hub International Ltd. acquired the assets of Shattuck & Grummett Insurance in Juneau, Alaska. John Grummett, Stacy Grummett, Rick Shattuck and Teresa Young, owners of Shattuck & Grummett, and their team will join Hub Northwest. Shattuck & Grummett is a fourth-generation firm that provides commercial and personal insurance, and employee benefits services. Chicago, Illinois-based Hub is an insurance broker and financial services firm providing risk management, insurance, employee benefits, retirement and wealth management products and services. DECEMBER 20, 2021 INSURANCE JOURNAL | 17
People National
Daniel J. Kaufman will
become president of wholesale broker Burns & Wilcox in January. He previously served as chief operDaniel Kaufman ating officer for Burns & Wilcox, the largest subsidiary of H.W. Kaufman Group. He is only the third president in the history of Burns & Wilcox. He is preceded by his father, H.W. Kaufman Group Chairman, President and CEO Alan Jay Kaufman, and by his late grandfather, Herbert W. Kaufman, who founded the company more than 50 years ago. In his new role, Kaufman will have leadership responsibility for Burns & Wilcox and its growth in the U.S. Additionally, he will continue to serve as executive vice president of H.W. Kaufman Group, overseeing the company’s information technology, marketing and compliance departments. Burns & Wilcox is a global wholesale insurance broker and underwriting manager with expertise in commercial and professional liability, property, environmental, marine and personal insurance. American Family spinout Arturo has hired Anita Tulsiani as its first-ever chief marketing officer. Tulsiani will be responsible for building the marketing organization, with an emphasis on digital marketing. Previously, she was the vice president of marketing for real estate brokerage eXp Realty. Before that, she was vice president of marketing at CoreLogic,
a provider of property data products. Arturo is a deep learning company offering physical property characteristic data and predictive analysis for residential and commercial properties for use in the property/casualty insurance, reinsurance, lending and securities markets. Arturo is a creation of American Family’s own research and development investment division.
East
Risk Strategies, a national specialty insurance brokerage and risk management firm, hired Alison Murphy as national practice leader of private client services. In this role, Murphy will develop and lead the overall national growth strategy for private client services. She will focus on enhancing the client experience for Risk Strategies’ high-net-worth clients and deliver tailored solutions to serve their insurance and risk management needs. Murphy comes to Risk Strategies with 25 years of experience in the property/ casualty insurance industry, the majority of which has been spent in the high-net-worth segment. Prior to joining, she worked for the PURE Group of Insurance Companies where she held various leadership positions, most recently serving as Eastern zone executive. Previously, she held various roles focused on business development and underwriting for AIG and The Chubb Corporation. NFP, an insurance broker and consultant that provides prop-
18 | INSURANCE JOURNAL | DECEMBER 20, 2021
erty/casualty, corporate benefits, retirement and individual solutions, Joshua Wozman hired Josh Wozman as senior vice president of public relations and communications. Wozman is responsible for helping to grow NFP’s global communications infrastructure as the firm strategically expands across North America and Europe. Wozman comes to NFP from Willis Towers Watson, where he served as director and head of North America public relations, leading strategic external communications for the global advisory and brokerage company. Prior to that, he served in a variety of communications roles for Burson-Marsteller, The PMI Group Inc., Shinoff Group, and the Consulate General of Israel. In all, he brings more than 20 years of marketing, communications and public relations experience to this new role at NFP. Wozman will report to Eric Boester, executive vice president and chief marketing officer. Ames & Gough, an insurance broker and risk management consultant specializing in serving design profes- Santina Ragonese sionals, law firms, associations/nonprofits and other professional service organizations, appointed Santina Ragonese as a senior account manager in the Boston, Massachusetts, office. Ragonese, who has more
than 10 years of experience handling property/casualty insurance for design firms, joins a team of Ames & Gough professionals serving the risk management and insurance needs of architectural and engineering clients. Previously, she was an account manager for five years with Smith Brothers, an insurance broker in Glastonbury, Connecticut. Earlier, she held the same position at Maloney & Company LLC in Guilford, Connecticut. Prior to her roles in insurance, Ragonese worked for nearly a decade in mortgage banking with Royal Bank of Canada in Boca Raton, Florida.
Southeast
Epic Insurance Brokers, a property/casualty insurance brokerage and employee benefits consultant, has named Alabama-based Crawford McInnis as chief sales officer. McInnis, of Birmingham, joined Epic in 2014 and led the company’s expansion into the Alabama market, Epic said in a news release. Brian Tanner, who has worked with McInnis in Alabama, will lead Epic’s specialty construction practice. Headquartered in San Francisco, Epic has more than 2,600 associates in 80 offices around the country. Somers Risk Consulting has named a South Carolina Department of Insurance analyst as senior manager of captive consulting services. Eva Conley was a supervisor and senior financial analyst for captive insurance at the South Carolina DOI, according to Somers, a boutique captive insurance firm.
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Florida-based Security First, a homeowners insurance provider, has appointed Monique Miskimon-Aikens as marketing and communications director. She previously worked with Booz Allen Hamilton in Maryland, was marketing director for Florida Wealth Planning Group, part of Ameriprise Financial, and was a college professor.
South Central
Risk Strategies, a national specialty insurance brokerage and risk management firm, announced that Terry Lyons was appointed as the national education practice leader. In this role, Lyons will develop and lead the overall national growth and client service strategy for the education industry practice. Lyons is based out of Texas. Since joining Risk Strategies at the end of 2019 through the acquisition of Academic HealthPlans, Lyons has served as the head of the company’s education industry student health practice. He will remain head of that practice, which serves more than 350 colleges and universities nationwide, while taking on overall responsibility for Risk Strategies’ education practice and solutions across property/ casualty, student health and employee benefits. Houston-based AmRisc Group, a catastrophe-focused
managing general agent in the U.S., announced Molly Nickoles has been appointed as CEO of Waypoint Wholesale, the company’s wholesale brand. Nickoles previously served as the chief underwriting officer for the builders risk
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product. She started her career as a senior underwriter with AmRisc Group in 2003. As AmRisc Group approaches $2 billion in gross written premium, Nickoles’ appointment is part of an ongoing strategy to position the company and executive leadership team for continued growth. Other recently announced leadership changes will also support this growth strategy. Billy Hammond will succeed Nickoles as chief underwriting officer of builders risk for AmRisc Group. Marcus Kelley will lead as division president of the now-combined Waypoint Technical Risks and National Specialty. Finally, in preparation for the upcoming retirement of Scott Hornsby, Thomas Bonnarigo will step into the role of AmRisc’s chief underwriting officer of national accounts in 2022.
Midwest
Midwest Insurance Agency Alliance (MIAA) announced Denise Zabka has recently joined the organization as agency development field specialist. In this role, Zabka will be directly responsible for agency development and consulting services of MIAA member agencies in Nebraska, North Dakota, South Dakota and Minnesota, with a focus on agency growth and development opportunities. Zabka comes to the organization with more than 30 years of experience in the insurance industry and an understanding of the Midwest markets. Prior to MIAA, she held leadership roles in two captive insurance companies, including as agency manager and district manager.
Zabka will work closely with MIAA Regional Vice Presidents Clayton Gravatt and Brian Boeshans. Together, they will be a resource for Midwest agencies facing start-up challenges, growing personal and commercial lines, technology adoption and usage, as well as new business and retention strategies. Founded in 2001, Midwest Insurance Agency Alliance Inc. (MIAA) is comprised of more than 200 independent agency members spanning across the states of Nebraska, Kansas, Missouri, Iowa, North Dakota, South Dakota and Minnesota. JM Wilson promoted Phyllis Aranda to executive transportation underwriter in its Arlington Heights, Illinois, office. Aranda is responsible for underwriting a variety of new and renewal transportation risks as well as strengthening relationships with independent insurance agents and company underwriters in Illinois, Wisconsin and Iowa. Aranda has been with JM Wilson since 2008 and has held various positions in JM Wilson’s transportation department. Most recently, she held the position of senior transportation underwriter. Prior to joining JM Wilson, she served in various rater and underwriter roles at American Country Insurance for 19 years. Founded in 1920, JM Wilson is a managing general agency and surplus lines broker providing independent insurance agents access to specialty markets. JM Wilson can provide coverage for standard and hard-to-place commercial transportation, property/
casualty, brokerage, marine, personal lines and surety.
West
Alliant Insurance Services named Peter Johnson executive vice president and managing director. Johnson is based in Portland, Oregon, and will focus on providing strategic risk management solutions for agribusiness clients across the country. Johnson has 28 years of experience in the brokerage field specializing in forestry and real estate. He was most recently resident managing director for Aon Risk Solutions. Alliant also named Amy Barlow and Rob Doerfler senior vice presidents in Portland, Oregon. Barlow will focus on leading agribusiness and forestry growth and development initiatives. Barlow has 27 years of experience in the underwriting and brokerage fields. Barlow was most recently a senior vice president at Aon. Doerfler will lead the forest products group. Doerfler has more than 22 years of experience in the insurance industry. Doerfler was previously with Aon. He was with Marsh before that. XPT named Tom Mansfield as senior vice president. Mansfield will be based in Seattle, Washington. He has more than 15 years of industry experience. He began his career as a casualty underwriter with Zurich and Argonaut Specialty, later joining Swett & Crawford. He was also a vice president with CRC Group and was a team leader for casualty and environmental.
DECEMBER 20, 2021 INSURANCE JOURNAL | 19
Special Report: Outlook 2022
The View for 2022:
P/C Insurance Predictions and Trends
I
t’s tough to make predictions, especially about the future.
— Yogi Berra, Major League Baseball player and humorist
By Andrew G. Simpson
E
ven before 2021’s final results are in the books, the forecasters are looking ahead to 2022. All in all, barring surprises like a pandemic, the stars appear aligned for a happy new year for the property/casualty insurance industry to the extent it controls its own fate. Here is a selection of prognostications about P/C insurance for 2022. But first some perspective. The New York Times recently reported that astronomers have 20 | INSURANCE JOURNAL | DECEMBER 20, 2021
discovered an asteroid flying through space that could crash into the Earth in 2022. It is about a half-mile wide and could do tremendous damage if it struck. Although astronomers say the chance of a collision is about 1-in-1 million, they also say more observations are needed to rule out a collision.
A Demanding Year
According to Swiss Re Institute’s latest sigma study, there will be a rise in insurance demand that could break premium records in 2022. This expected rapid growth reflects rising risk awareness in the wake of the pandemic and continued strong rate hardening in insurance commercial lines. The insurer estimates that INSURANCEJOURNAL.COM
Where Insurance Prices Will Moderate in 2022. And Where They Probably Won’t.
C
ommercial insurance prices in general should stabilize in 2022, although not in cyber where increases from 50% to as much as 150% could be in store, according to one brokerage’s predictions. Willis Towers Watson also said that while the industry can expect pricing to moderate in general, fiduciary liability insurance may be another exception along with cyber. Rates within these two lines have been going up steeply, and in the case of cyber, the increases it is forecasting for 2022 are even steeper. The firm sees prices for fiduciary for financial
global non-life premiums will grow by 3.3% in 2021, 3.7% in 2022 and 3.3% in 2023. “Market conditions suggest that positive pricing momentum will continue across all lines and regions. Inflationdriven higher claims development in all lines of business, continued social inflation in the U.S. and persistently low interest rates will be the main factors for market hardening,” said Jerome Haegeli, Swiss Re group chief economist. The outlook for the insurance industry is also boosted “by a strong cyclical recovery from the COVID-19 shock, but economic growth is expected to slow in the next two years due to an unfolding energy price crisis, prolonged supply-side issues, and inflation risks,” said the study. INSURANCEJOURNAL.COM
Steady and Stable
P/C insurers will enjoy steady underwriting profits and earnings in the face of headwinds, according to Fitch Ratings. The headwinds include higher inflation and a likely reduction in contributions from investment gains. These analysts predict a 97 combined ratio. However, if higher inflation persists, profitability and reserve strength would be expected to weaken in longer-tail segments, including workers’ compensation and other liabilities. Catastrophe risk exposures will add volatility as well. Fitch expects 2022 to be the fifth successive year of price rises, although growth will be slower than in 2021. Analysts also believe that the risk of rising inflation will remain manageable for the
industry in 2022. AM Best has revised its 2022 commercial lines market segment outlook to stable from negative for key segments, despite some near-term challenges including inflation, an uneven economic recovery and continued pressure on jury awards and settlement costs. The stable outlook reflects AM Best’s expectation that “on balance the segment will remain profitable, its risk-adjusted capital position will remain sound, and the segment will be resilient in the face of these near- and longer-term challenges.” AM Best analysts cite the relatively modest negative impact of the COVID-19 pandemic, continued strong pricing momentum and favorable rulings to date on many business interruption
institutions climbing 15% to 50% next year. “For the most part, we are moving toward stability as we watch the workings of a simple economic law — supply and demand,” Jon Drummond, senior editor, Insurance Marketplace Realities and head of Broking, North America at Willis Towers Watson, writes in the report. “That does not mean, however, that this is a simple marketplace.” According to the editor, there is a two-tiered marketplace in many lines of business with conditions better for better risks and tougher for less attractive risks. The bottom line is that
continued on page 23 coverage disputes. AM Best has revised its market segment outlooks to stable for workers’ compensation, commercial property and surety. The outlooks for commercial auto, general liability, medical professional liability, and professional liability are negative.
Wishful Thinking
Insurance agency Woodruff Sawyer detects a “noticeable shift in the wind in favor of insurance buyers” in 2022. Woodruff Sawyer warns that “insurers’ optimism around continued rate increases may be wishful thinking,” noting that a second quarter survey by CIAB reported that average commercial lines rate increases in the quarter were 8.3%, down from 10.0% in Q1 2021. The
continued on page 22
DECEMBER 20, 2021 INSURANCE JOURNAL | 21
Special Report: Outlook 2022 continued from page 21 magnitude of rate increases has lessened since the fourth quarter of 2020. “Our view of 2022 is that rate increases will flatten throughout the year, particularly in property and casualty. New market entrants increase competition, which should drive rates lower. High-quality risks may even see some rate decreases by late 2022,” the agency concludes.
The Muted Impact of COVID
AM Best revised its outlook for the workers’ compensation segment from negative to stable for 2022. This action reflects a number of factors, among them the “unexpectedly muted impacted of the COVID-19 pandemic” and solid risk-adjusted capitalization, redundant loss position and favorable combined ratios. Counterbalancing factors include states’ rate decreases, claims latency and the longterm health effects of the virus and regulatory and legislative actions that could affect the ultimate cost of certain claims. Also, intensifying competition.
Returning to Pre-Pandemic Market Trends
The personal lines insurance
segment has managed to navigate 2021’s challenges including above-average catastrophe activity, a return to pre-pandemic frequency trends, and increased loss cost severity. Looking ahead to 2022, ratings agency AM Best is maintaining a stable market segment outlook on the personal lines insurance industry. AM Best analysts point to the segment’s strong risk-adjusted capitalization, underwriting actions limiting volatility in the homeowners line, and the acceleration of the use of technology as reasons for the outlook. Also, carriers continued rate actions throughout 2021 and were able to limit the impact of catastrophe losses in 2021 with exposure management and enhanced reinsurance. While a number of factors favor the segment, personal lines writers also face challenges heading into 2022. These include auto loss frequency returning to pre-COVID levels and severity increasing while having premium trends keep pace. Insurers also face the likelihood of catastrophe events and claims from secondary perils. Another challenge is rising reinsurance costs.
22 | INSURANCE JOURNAL | DECEMBER 20, 2021
Cyber Rates and Wariness
Smarting from increasing payouts and shrinking profits, insurers are reducing the cyber cover they will provide at the same time that demand for coverage is soaring. Insurers have been able to charge higher rates to cover their cyber costs, but they still remain wary. Fitch Ratings notes that the cyber insurance market saw sizable rate increases and tighter terms and conditions in 2021, as some larger writers of cyber insurance reported deteriorating loss experience. Favorable pricing momentum is expected to continue in 2022, according to a survey by The Council of Insurance Agents and Brokers that indicated rising cyber renewal premium rates over the last 18 months, including a 25% increase in the second quarter of 2021. However, continued unfavorable claims experience points to higher cyber loss ratios in 2021. Earned premium growth from recent pricing actions should help stabilize results for 2022. S&P Global believes that the pandemic caused economic and insured losses from cyber attacks to skyrocket, which has heightened awareness of
the risk and increased demand for cyber re/insurance. “The trend toward digitalization will inevitably lead to a higher likelihood of cyber incidents. Prices in the cyber re/insurance market could therefore rise sharply over 2021-2023, even doubling in some cases,” said S&P Global Ratings analyst Manuel Adam. S&P expects this business line to be one of the fastest growing insurance markets over the next decade. While the number of reinsurers and insurers offering cyber coverage is rising, along with demand, capacity is still limited. S&P has warned that a lack of capacity “could be holding back the development of a sustainable cyber re/insurance market.”
Gate Opens for Private Flood
The National Flood Insurance Program has developed Risk Rating 2.0, a strategy to move all properties to a true risk-based rates. Risk Rating 2.0 is rolling out in two phases. In phase one, which began on Oct. 1, 2021, new policies, as well as policies eligible for renewal on that date, are subject to the new rating methodology. In phase two, policies
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renewing on or after April 1, 2022, will be issued under Risk Rating 2.0 methodology. Under Risk Rating 2.0, the annual premium rate is expected to decline for a quarter of policyholders in the NFIP. But, many will see rates increase and reach their full risk rate in roughly five years. Eventually, the new rating measures should lead to more adequately priced NFIP risks and more competitive coverage offered by private insurers. According to AM Best, higher premium costs for federal flood insurance should make the private flood insurance market more competitive and inviting for more insureds to the private market. However, private sector carriers are being selective and avoiding risks in flood-prone areas while concentrating more on commercial properties than homeowners.
New Heights for Insurtech M&A Deal Making
Clyde & Co.’s Vikram Sidhu writes that M&A deals involving insurtechs “will accelerate to reach new levels” in 2022. This will include deals in which insurtechs are the targets of larger existing players. However, there will also be an increasing number of deals with insurtechs as the acquirors and/or deals between insurtechs. Sidhu notes that insurtechs with solid funding can put some of their money to use for their own acquisitions. At the same time, incumbent insurance industry members are increasingly seeing acquisitions of insurtechs as a more attractive way to bring in-house new technologies, businesses, and know-how instead of homegrown development. INSURANCEJOURNAL.COM
continued from page 21 most buyers will be paying more for insurance in the near term, however it should be “less painful” and the downside for clients in the higher hazard tier should not be as bad. “For better or worse, our industry will continue to move with the laws of supply and demand,” he writes. Drummond adds that if supply continues to come back as it has in the second and third quarters of this year, rate decreases could begin as early as the second quarter of 2022, although not across all lines, and cyber will continue to be a Finally, investors in insurtechs see sale of their investments as an attractive exit alternative to the IPO route, which also will fuel M&A activity.
Weather or Not for 2022
With an average hurricane season being 14 named storms, 7 hurricanes, and 3 major hurricanes, Colorado State University weather gurus predicted the 2022 hurricane season has a 40% chance of an above-average season. They predict 13-16 named storms, 6-8 hurricanes, and 2-3 major hurricanes. They also predict: 25% chance of 15-18 named storms, 9-11 hurricanes, and 4-5 major hurricanes; 25% chance of 9-12 named storms, 3-5 hurricanes, and 1-2 major hurricanes; and a 10% chance of 6-9 named storms, 2-3 hurricanes, and 0-1 major hurricanes. The 2021 season was very active with 21 named storms, but only relatively average
challenge well into 2022. Some of the report’s pricing predictions: • Commercial property cover for non-challenged occupancies should go up between 2% and 10% in 2022 but challenged occupancies should see hikes of 15% or more. • There is a range of predictions within domestic casualty lines, including single to double-digit price hikes for general liability and auto. Low to mid-double digit price hikes are likely for umbrella (high hazard) and excess (high hazard). International should be flat, and workers’ compensation in the number of hurricanes (7) and the number of major hurricanes (4).
Moving to the Endemic Phase of COVID-19
Dr. Elizabeth McNally, director of the Center for Genetic Medicine, is among the few willing to venture a prediction about the virus: “In 2022, we will move more to the endemic phase of SARS-CoV-2 infection, where we continue to learn to live with the virus. Although there are many concerns about new variants, especially Omicron, at this stage it seems like those who are vaccinated and boostered are not likely to become very sick after being exposed to the virus. The greatest risk remains for those who choose to avoid vaccination. “Since natural immunity from prior infection and immunity from vaccines both wane over time, the overall U.S. population will have a range of protection in 2022. To manage
should range from a 2% decrease to 4% increase, according to the report. • For executive risks, directors and officers public company (primary) will see flat to 25% rate hikes. D&O for private/non-profit (overall) should go up anywhere from 5% to 40%. E&O for large law firms should see rate hikes go up between 5% and 10%. Employment practices liability (primary) should jump 10% to 30%, and fiduciary (financial institutions) should climb 15% to 50%. • Terrorism and political violence rates should either be flat to 20% higher next year. this broad range, I predict we will rely more on antibody testing to help guide patients with underlying medical conditions and inform their need for additional boosters. I suspect we will see a vaccine specific to the Omicron variant. “Travel will continue but will likely required more rapid testing, especially when crossing borders. “For those who choose to remain unvaccinated, I doubt the world will get easier for them. The vaccinated are losing their patience with having to take so many steps to protect the unvaccinated. At some point, we may just stop doing so much testing on those who are vaccinated and boostered, and instead just focus resources on better protecting the unvaccinated. “The newly arriving medications will help reduce need for hospital beds. But moving forward, all attention needs to focus on managing the availability of hospital beds.”
DECEMBER 20, 2021 INSURANCE JOURNAL | 23
Closer Look: The P/C Agency View for 2022 Insurance Agents Eye Changes to Support Growth in 2022
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majority of insurance agents have a very positive outlook for 2022. About 70% expect their business growth to be on track in the new year, while nearly 20% expect that growth to be “off the charts.” According to an October online survey of 520 agents and brokers from Aon Programs, they are planning to add products, rethinking their employee offerings and emphasizing social media in heir marketing. “Since the start of the pandemic, we’ve seen so many agents cast a critical eye on all facets of their businesses to help their clients make better decisions amid rapid change,” said Chad Levine, executive vice president and chief strategy officer of Aon Affinity. “You can see that trend continue in our survey results as agents fine-tune their business models for growth in 2022.”
‘Since the start of the pandemic, we’ve seen so many agents cast a critical eye on all facets of their businesses to help their clients make better decisions amid rapid change.’ Survey findings include:
• Product expansion will be a leading strategy for agency growth. Almost 35% of agents
said they will adapt to changing customer needs by adding to their product offerings in the new year. They’re taking a note
from the headlines as they enhance their product menus. In fact, the top three specialty lines agents plan to add in 2022 include: 1. catastrophe (commercial and personal/ private coverage); 2. healthcare (beyond allied health); and 3. nonprofits.
• As the Great Resignation continues, agents are upping their recruiting and retention game. Thirty-six percent are
using new channels to connect with prospective employees; nearly 29% have enhanced their compensation and benefits packages; and about 18% have expanded their talent search beyond their immediate geographic region. They’re also rethinking their criteria for new hires as professionals continue to embrace the virtual
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workplace and make career changes. Respondents are more open to hiring candidates who are remote, unable to work traditional business hours, don’t have an insurance background, and don’t have the required years of experience, but seem highly trainable.
• The pandemic has shaped and reshaped agent marketing strategies. Forty percent
of agents are betting on social media to give them the biggest marketing boost in 2022, with email blasts in second place at 22%. In a possible nod to Zoom fatigue, webinars/virtual events, which held the top spot in Aon Programs’ 2020 survey, slipped to third place this year at 20%. Conversely, interest in direct mail is up 5% year over year, increasing from 8% in
2020 to 13% 2021 — a possible shift to stand out in a virtual world.
• Agents are ready for their on-camera moment. Video
marketing tops the list of new marketing tools agents want to explore in 2022, garnering 42% of responses. Search engine marketing (24%), influencer marketing (21%) and audio marketing (14%) round out the list. Despite the changes, the survey finds agents continue to lean on traditional fundamentals as they guide clients. When asked about the most important quality for their brand to express, 43% said commitment to customers; 26% cited authenticity; 15% said responsiveness; and 13% noted innovation. INSURANCEJOURNAL.COM
2022 Holds Promise for Insurance Agents and Digital Carriers
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echnology will continue to influence changes in insurance markets in 2022, especially among agents and digital carriers. So say the people at Agentero, a digital platform and network that uses data and analytics to enable agents to proactively offer insurance choices to customers. Agentero’s founder and CEO Luis Pino was the first employee at CoverWallet and has also worked for McKinsey & Co. “Insurance markets are changing. For years, the discussion about technology adoption has been focused internally on improving manual processes. While that’s still important, we’re seeing so much more. Technology is a key factor in agents’ growth strategies, including how they uncover new opportunities, expand into new markets, and interact effectively with carriers,” said Pino.
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Analyzing data on its platform and research from others, Pino and his team identified four key trends for 2022:
1. Digital carriers become household names. Digital
carriers are growing in brand recognition. Consumers are increasingly more comfortable buying policies from new carriers, and agents are more open to offering their products. According to S&P Global, year-over-year growth for Lemonade and Hippo was the highest in the industry for companies with at least $50 million in quarterly premiums, for example. New technologies are enabling digital insurers to get their products in front of large numbers of agents quickly, giving agents easy and fast access to newer product offerings. For many, the convenience factor and speedto-market are opening doors to working with new carriers.
2. Big gains in supplementary
products. Data analytics
is helping agents uncover opportunities in their customer bases, such as car owners who rent, homeowners with pets, and small businesses that lack cyber protection. It’s an important opportunity as many of these categories are growing rapidly. For example, many people are trading homeownership for renting, and they’re shopping for new insurance, according to JD Power. While in the past, selling supplemental policies manually often took too much time, technology is enabling agents to sell lower revenue products in higher volumes.
3. Fewer barriers for start-up agencies. The barriers to start-
ing an agency are lower than ever. The pandemic has also created virtual opportunities in which agencies are not bound by location and can operate in states where they know the customers have an appetite for certain types of insurance.
Technology also makes carrier appointments easier, enabling agents to begin working with new carriers quickly and easily.
4. The independent agent model advances. For years,
many people have talked about the end of the agent model. That discussion should finally end as we see record growth among independent agents in 2022. Expect the independent agent channel to continue to become stronger as more carriers — including digital carriers that were founded on direct-to-consumer models — realize the benefit of agent distribution. In addition, more legacy carriers with captive agents in the past will follow the path of Nationwide and Liberty Mutual, enabling agents to sell coverage from additional insurers. According to Foundation Capital, there has been a 32% decline in captive agents as captive agents and carriers are becoming more independent.
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News & Markets Wells Media Group Transitions Ownership to Its Employees
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ells Media Group, Inc announced that it has become a 100% employee-owned firm via the launch of an Employee Stock Ownership Plan (ESOP). Wells Media, the publisher of Insurance Journal, Carrier Management and Claims Journal and other news and insights services for the property/casualty insurance industry, has been family-owned since its founding in 1923. “We have terrific people working at WMG. They’re talented and have a wonderful work ethic.” says Chairman Mark Wells. “It just felt right to me to sell my company to my employees.” Mark will continue to serve as chairman of the board of directors. The company has offered quarterly profit-sharing and open-book management for many years already, according to CEO Josh Carlson. “The employee mindset at Wells Media Group has always been one of growth and empowerment. We want everyone to see how their actions influence the bottom line, and we want them to share in the upside. This next step in our evolution is exciting for everyone.” Under the plan, eligible employees earn a yearly allocation of stock. The value increases as the value of the company increases. Wells Media intends to also continue offering its quarterly profit-sharing plan. “We’ve been given a great opportunity, but also a great responsibility,” Chief Content Officer Andrew Simpson shared with fellow employees. “We get to control our fate.” “I was thrilled for the news to be revealed to our whole team. We have an amazing group of people who work together beautifully. It’s great that we can continue the culture that’s made us successful,” said Chief Marketing Officer Julie Tinney. The ownership transition won’t impact
the day-to-day management of the company, as the management team that has been guiding the company for the last several years will remain in place. The management team consists of Chief Executive Officer Josh Carlson, Chief Financial Officer Mark Wooster, Chief Content Officer Andrew Simpson, and Chief Marketing Officer Julie Tinney. Employees learned of the ownership change in a virtual meeting on December 7, 2021. A box was sent to each employee in advance, with instructions not to open until the company meeting. Spouses were encouraged to attend. An announcement was made that the company had been sold, and that they should open the box to find out who the new owner will be. Inside
each box was a mirror. The reveal was, according to long-term employee Dena Kaplan, “Absolutely epic.” Wells Media Group serves the property/ casualty insurance industry. Its brands include: Insurance Journal, the P/C insurance industry’s leading website and magazine; Claims Journal, for P/C claims professionals; the Academy of Insurance, an online learning center for P/C insurance professionals; Insurance Journal TV, a media site featuring insurance industry videos and podcasts, and MyNewMarkets. com, a searchable database of insurance markets which connects thousands of agents with market providers; and Carrier Management, which provides research, news, online media and a magazine for insurance company leaders.
from our family to yours
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News & Markets
California Man Arraigned on 14 Counts of Insurance Fraud in ‘Paper Collision’ Scheme
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arrukh Hussain, 37, of Eastvale, California, was arraigned on 14 felony counts of insurance fraud after allegedly stealing consumers’ identities to file 14 fraudulent insurance claims with six different insurance companies using a “paper collision” scheme – meaning most of the accidents never occurred and only existed on paper. The California Department of Insurance launched an investigation after multiple insurance companies flagged claims that they had received. An investigation reportedly found that Hussain stole his victim’s insurance information and posed as that person to report accidents where
he was the other party involved. While posing as his victims, Hussain would allegedly admit fault to the accident and request their contact information be updated to his own phone number so the insurance company would contact him regarding the claims instead of the real policyholder in order to get away with the scheme. Detectives reportedly discovered Hussain obtained his victims’ insurance information while their vehicles were being worked on at a stereo and tint shop in Covina where he was previously employed for a short time as a “sales-helper,” and he is suspected
of obtaining victims’ information while brokering vehicle purchases for them. Hussain reportedly used two BMWs, which he owned, that had pre-existing damage and presented the same damage on each claim he filed. Many of the claims were for “paper collisions,” but in one instance, Hussain was reportedly able to obtain one victim’s information from a traffic collision report through a legitimate accident. Hussain’s alleged actions resulted in a total loss of $17,293 to six different insurance companies. This case is being prosecuted by the Los Angeles County District Attorney’s Office.
Arthur J. Gallagher to Pay $40K to Settle Colorado Religious Discrimination Suit
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rthur J. Gallagher & Co. will pay $40,000 to settle an employment discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission. The EEOC charged that Arthur J. Gallagher violated federal anti-discrimination laws when it fired a client underwriting associate in its Centennial, Colorado office in 2019. According to the EEOC lawsuit filed last year, Gallagher knew of Yu Rex Noda’s Christian religious practices, including fasting in conjunction with Lent. A termination memo Gallagher issued cited “fasting” and “meditating” among reasons for firing Noda, according to the EEOC. The EEOC said that Gallagher’s termiW2 | INSURANCE JOURNAL | DECEMBER 20, 2021
nation decision violated Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on religion. The EEOC charged that Gallagher also violated the Americans with Disabilities Act, which prohibits employment decisions made because a company regards an employee as having a disability. The EEOC filed suit in U.S. District Court for the District of Colorado (Equal Employment Opportunity Commission v. Arthur J. Gallagher & Co., after first
attempting to reach a pre-litigation settlement through its conciliation process. Under the two-year consent decree resolving the EEOC’s claims, Gallagher will pay $40,000 to the fired employee, provide anti-discrimination training to managers in its Midwest region, and provide annual reporting to the EEOC. Senior U.S. District Judge R. Brooke Jackson has approved the decree, and the federal district court will retain jurisdiction to enforce it. INSURANCEJOURNAL.COM
News & Markets Are Too Many Comp Claims Being Opposed? Some Major Employers Think So By William Rabb
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mployers may be warming up to the idea that fighting some workers’ compensation claims and medical treatments can be counterproductive, and new emphasis should be placed on keeping injured workers happy — and out of the courtroom. “The workers’ comp system should be self-executing and so many times, it’s not,” said Michele Adams, vice president of risk management for risk management for Walmart. Adams spoke at the Workers’ Compensation Institute’s 75th annual educational conference in Orlando, which organizers said is the largest gathering of workers’ comp professionals in the country. The opening session — “Does Our System Do Harm?” — included a range of speakers who said that, at least in some cases, the answer is “yes.” Susan Shemanski, vice president for corporate risk management at the Adecco Group, a large, global, temporary staffing firms, appeared to take issue with limits on benefit amounts and durations that a number of state legislatures have enacted in recent years in efforts to reduce costs to employers and insurers. “It’s really not fair to the injured worker. I think this is an area that does harm to the injured worker,” Shemanski said. “It’s almost like a penalty for doing well,” Adams added, noting that better comp benefits can help recruit and retain good workers. Shemanski added that some injured workers have been thrown into near-poverty conditions while living on comp disability, have contemplated suicide, and have turned to opioid medications to relieve physical and mental stress. She related the story of one amputee who couldn’t make car payments with the level of indemnity payments he was receiving. That, in turn, made it difficult to get to work when he was ready to return. About 90% of comp claims are INSURANCEJOURNAL.COM
accepted and paid without much disagreement, the panelists said. But some 10% end up in litigation or mediation, and that’s too many. When injured employees feel cheated or ignored or have been denied benefits, or face utilization reviews, that drives many to seek legal counsel, adding to the loss adjustment expense on claims, they said. “I perceive that there’s way too much inclination toward litigation,” said David Langham, the chief workers’ compensation judge in Florida. “I’m probably not going to make any friends with this statement, but I think that probably, out there among us, there are way too many lawyers with little else to do.” Advertising by plaintiffs’ lawyers, particularly in Florida, is so commonplace that workers can’t help but feel they are due more than the amount of comp benefits they may be receiving, panelists said. Seeing that claimants are cared for, with proper benefits, can get them back to work sooner — and away from the television and its regular stream of attorney advertisements, they argued. At a session on managing risk and exposures to improve employers’ bottom lines, claim experts said giving extra attention to injured workers is gaining acceptance across the country. “Claim advocacy” has become a new buzzword in the industry, said Scott Clark, a Florida-based vice president and claim advocate for Arthur J. Gallagher Risk Management Services. “Injured workers who have become isolated run to attorneys’ offices where they feel they’ll have representation,” Clark said. “And you don’t want that.” He said employers should make sure that injured workers are involved in and informed about the claim process at every step. That includes soliciting claimants’ input on medical treatment, and often sending them to a specialist physician, not to a “doc in the box” urgent care clinic. Adams, of Walmart, said with comp benefits and procedures differing so much from state to state, new efforts should be
made to research the practices that work best and reduce friction in the system. With so much data now available, more ways can be found to utilize it, along with artificial intelligence and competent claims adjusters, in order to avoid litigated claims and unneeded utilization reviews. Following the multiple tornadoes that ripped through parts of the South and the Midwest in December, injured workers and families of workers killed face a wide range of benefits. Some will see more assistance than others, officials at the conference said. In Kentucky, one of the states hit hardest by the twisters, workers at a candle factory saw the building collapse around them, killing as many as two dozen workers. Some of those workers will not qualify for post-traumatic stress disorder benefits, explained Dwight Lovan, a former commissioner at the state Department of Workers’ Claims. Kentucky law, unlike statutes in several other states, allows mental stress benefits only if the worker has also suffered a physical injury. DECEMBER 20, 2021 INSURANCE JOURNAL | 27
NATIONAL | Special Report | The Charity Issue
Higginbotham In partnership with the North Texas Community Foundation, Higginbotham created the Higginbotham Community Fund in 2011 to provide monetary support to nonprofits operating in markets where it has offices. Since its inception, the Fund has raised $4.3 million in employee contributions and pledges, and has made grants to 1,549 nonprofits. Last year in response to COVID-19, the firm launched the Higginbotham Helps program to support restaurants experiencing financial hardship. Through the Fund, it purchased over 14,000 meals from restaurants in its operating areas to feed front line workers, emergency responders and neighbors in need.
A.I.M. Mutual Insurance Cos. Since 2016, A.I.M. Mutual has partnered with Cradles to Crayons in the Boston area, whose mission is to provide school supplies to area children. Each year, employee volunteers help fill hundreds of backpacks in time for the school year. During the pandemic, A.I.M. Mutual shared the location of outdoor community collection sites so employees could continue to donate safely and support classroom and remote learning. In July, nine A.I.M. Mutual employees helped with the 2021 Ready for Learning initiative which benefited 65,000 children living in low-income and homeless situations across Massachusetts. In addition to school supplies, the backpacks contained clothing and hygiene items.
Marshall & Sterling Insurance Marshall & Sterling Insurance contributed over $800,000 to charitable causes in 2021, including to two events that partnered with Feed the Children to address the growing struggle of food insecurity in communities the firm serves. This problem has been dramatically exacerbated by the COVID-19 pandemic, with families struggling to meet the most basic of needs. Over 60 Marshall & Sterling employees volunteered their time to help distribute 32,000 pounds of food and other supplies to families in need. The goal was to help provide children and families in the Poughkeepsie and Schenectady areas with enough food and essentials to last for several weeks.
IICF Midwest Division The Insurance Industry Charitable Foundation’s (IICF) Midwest Division in 2021 supported nonprofit and charitable organizations throughout the region. The division’s newly formed Heartland Chapter Associate Board partnered with reStart, a nonprofit in Kansas City, on the organization’s 40th anniversary to help fight homelessness in the area. IICF volunteers worked in person and virtually, raising funds and providing support for people starting over. During IICF’s Week of Giving, Midwest Division volunteers helped Cradles to Crayons organize and pack thousands of winter coats to be distributed to children throughout Chicagoland, where one in two children is at risk of clothing insecurity.
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Energy Insurance Agency Energy Insurance has a long history of participating in and donating to its community. This year, employees came together to host many charitable events. In July, the agency hosted a monetary drive for God’s Pantry of Lexington. With the efforts of many Energy associates and a donation match by its president, the firm was able to give $10,000, which contributed 80,000 meals to the local community. Energy also hosted a drive to provide new household appliances and furniture to Hope Hill Youth Services in Eastern Kentucky. In addition, employees raised over $2,000 for the Alzheimer's Association.
Atlas Insurance Agency During the pandemic, Atlas Insurance Agency hosted and produced four live virtual benefit concerts for clients, partners, and employees and their families. The concerts were a way to both support local musicians and provide nonprofit community organizations with a $10,000 gift. In 2020, Atlas hosted The Mākaha Sons and Anuhea, benefitting Parents And Children Together (PACT) Hawaii and Lanakila Pacific. In 2021, Atlas hosted Josh Tatofi and Kapena, benefitting Child & Family Service (CFS) and the Maui-based nonprofit Hale Makua Health Services.
RIGHTSURE, INC.
RightSure Inc. is community-driven, proudly supporting multiple charities with volunteerism and monetary donations. A portion of every policy sale is contributed to one of the agency's charitable partner organizations. The mission in 2021 has been to donate to causes emanating from Tucson, where it is headquartered, as well as Arizona and beyond. The goals this year: Help erase hunger by supporting communityfoodbank.org; sponsor Special Olympics of Arizona, specialolmpicsarizona.org; support domestic violence victims, emergecenter. org; and help end human trafficking, endhumantrafficking.org.
Mackoul Risk Solutions Mackoul Risk Solutions proudly supports local businesses and their community. The firm regularly donates to local organizations, as well as to the Insurance Professionals Association of Long Island (IPALI) and the United Way. During the height of the COVID-19 pandemic, the agency was proud to be able to send meals to first responders, as well as an iPad to a local hospital. Mackoul believes that coming together as an organization to help communities in need will yield powerful results and drive it to be a better insurance agency. The photo above shows Mackoul Risk Solutions employees Elizabeth Cornell, Donald Schtazle, and Daniel McClure with 2021 Thanksgiving drive donations for a local church.
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Robertson Ryan & Associates
The team at Robertson Ryan values making a difference and going the extra mile. Its annual Service Day is an exceptional way to show how much the group cares. The firm and its colleagues have always had an abiding respect for nature, and so, selected “the environment” as its 2021 service theme. Many of the projects included face-lifts and clean-ups at community spaces and waterways. In October, over 225 volunteers across 23 states performed more than 675 hours of volunteer work. The shared goal was to make this fun, simple and safe for our team, and their friends and family who participated.
Higginbotham Higginbotham is a sponsor of Fort Worth's Cristo Rey High School Corporate Work Study Program. Through the eight-month program, Higginbotham mentors four students while they serve in entry-level jobs. Many employees give their time to help teach the students real-world work skills. The students are assigned to departments based on their interest. Two are working in IT, one in commercial P&C and one in employee benefits. This is the third group of students that Higginbotham has mentored.
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HUB International Northeast The IICF's “Week of Giving” is always an impactful time for the employees of HUB International Northeast. For this year’s Week of Giving, HUB Northeast ran a “HUB Supports the Children” campaign benefitting Cards for Hospitalized Kids, an internationally recognized charitable organization that spreads hope and joy to hospitalized kids across America through uplifting, handmade cards. One office held a virtual “Cards for Hospitalized Kids Luncheon,” where employees got together over Zoom to create cards. One employee coordinated with a family member, a teacher who asked her entire class to submit cards. The talented students responded with dozens of heartfelt card submissions.
IICF UK Division In 2021, the Insurance Industry Charitable Foundation’s (IICF) UK division made a significant impact despite government lockdowns due to COVID-19. In one initiative, the UK division partnered with the Vision Foundation, a London based charity with a focus to inform, empower and include those living with sight loss. During IICF’s Week of Giving, volunteers from the IICF UK Division conducted mock interviews with Blind in Business, a Vision Foundation affiliated charity. Volunteers virtually provided tailored feedback and guidance to six visually impaired young professionals. The division plans to award a grant of at least $13,500 for the Vision Foundation and visually impaired community. In total, the UK Division will award approximately $110,000 in grants in 2021 to eight charities.
Leavitt Recreation & Hospitality Insurance Leavitt Recreation & Hospitality Insurance (LRHI), an affiliate of Leavitt Group, is an independent insurance agency based in Sturgis, South Dakota. Since 1981, LRHI has helped insure over 3,500 campgrounds and resorts nationally, so it was an easy decision to align with an organization like Care Camps, created by the KOA (Kampgrounds of America) in 1984 to provide opportunities for children with cancer to attend and participate in medically supervised camps. Among other fund-raising initiatives, LRHI donated $7,000 toward the purchase of a Ford Mustang to be raffled off at the KOA conference in Baton Rouge.
USI Insurance Services USI Gives Back is an award-winning social responsibility program where USI employees volunteer their time and talents in support of their local communities. Since its inception in 2014, more than 8,000 USI associates have volunteered through Gives Back, impacting over two million lives. In summer 2021, USI team members joined together to give back through a mix of in-person and virtual volunteer events throughout the U.S. and Europe. Combined, these volunteer initiatives positively impacted more than 160,400 lives and totaled over 11,600 hours of volunteerism. As part the Gives Back community service campaign, Atlanta team members harvested more than 100 pounds of produce at Tapestry Garden, a community garden that donates its produce to Atlanta area food pantries.
Falvey Insurance Group Falvey Insurance Group and its subsidiaries chose to align 2021-2022 philanthropy efforts with causes related to their business operations. Falvey Cargo Underwriting supports the international seafarer welfare charity, Mission to Seafarers. Falvey has donated $5,000 to Mission to Seafarers and 200 copies of a book adored by Falvey staff, “The Boy, The Mole, The Fox and The Horse.” Falvey also backs Operation Stand Down RI (OSDRI) — a 501c3 providing wraparound services to veterans. It served as host and presenting sponsor of “Fore the Vets,” a charity golf tournament that raised $23,000 for OSDRI.
CNA Insurance In October, CNA gave back to local communities during its CNA Volunteer-a-thon, a month-long initiative where 1,295 hours were spent volunteering in those communities. Colleagues teamed up across the globe and competed for the CNA Volunteer-a-thon trophy, awarding the winning team with a $5,000 donation toward a charity of its choice. This year’s champion, the actuarial team, joined American Rivers and picked up more than 1,200 pieces of litter along the Chicago River.
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NATIONAL | Special Report | The Charity Issue
IICF Southeast Division This year, the Insurance Industry Charitable Foundation’s (IICF) Southeast Division continued its mission focus on providing military families with support and assisting those struggling with food insecurity. In partnership with Operation Once in a Lifetime (OOL), IICF’s Southeast Division board of directors awarded a community grant of $2,500 to OOL to benefit military families. IICF volunteers in Dallas served lunch to soldiers as they returned from a two-month tactical training. By the end of 2021, the Southeast Division expects to have awarded $750,000 in grants to support local nonprofit organizations, initiatives and those in need.
AM Best For 17 years, AM Best has helped struggling families at the holidays through Norwescap’s Holiday Giving JOY Program. Norwescap is a non-profit organization serving low-income individuals and families in Northwest New Jersey, where AM Best is headquartered and many employees live. Each December AM Best provides holiday gifts and financial support to more than 20 families and roughly 40 children aged 14 or younger. The adopt-a-family program is a favorite cause of AM Best employees, who embrace the opportunity to help our neighbors in need. Last year, the company installed outdoor drop boxes where staff could safely deliver non-perishable foods, household items and gifts. AM Best also provides grocery gift cards to the families it sponsors.
Christensen Group Christensen Group's employee-led Charity Committee partnered with Car Care Program, whose mission is to help restart individuals’ livelihoods through car donations. In giving back to the communities it serves, Christensen Group also likes to have fun along the way. Its Charity Committee hosted a Bean Bag tournament to bring co-workers together to raise charitable funds. All the entry-fee donations and a company-provided match were donated to the Car Care Program. The group donated to a local organization in Alexandria, Minnesota. Pictured: Dave Deterding, a local producer, presenting the check.
UFG Insurance Each year, UFG Insurance recognizes one employee and one independent agent for going beyond the professional call of duty to care for their communities. Memorializing the philanthropic spirit of longtime leader (and son of company founder) Scotty McIntyre Jr., UFG has bestowed its Go Beyond Award in his honor since 2015. The award includes a trophy and a $5,000 donation from UFG to the nonprofit of each winner’s choosing. This year, the award celebrated Iowa employee Kelly Thomas, who serves as a volunteer firefighter, and New Jersey insurance agent, Doris “Dee” Zampella (pictured) of EAB Insurance Group, who volunteers with more than 10 nonprofits.
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South & Western South & Western proudly supports Texas Little Cuties, a 501(3)(c) nonprofit dog and cat rescue located near its headquarters in Addison, Texas. Multiple events are held throughout the year to raise much needed supplies and funds for this small, all volunteer, no kill shelter that brings a second chance at life for abandoned animals. South & Western's mascot, Brighton, personally oversees all aspects of this worthy initiative!
Gaspar Insurance Services On November 6, the team at Gaspar Insurance Services ran to raise funds for The Y outreach efforts to help children and their families in the community participate in programs that they otherwise could not afford. The family fun event held at Pierce College raised over $61,000, and agency Founder and CEO Tim Gaspar finished in first place!
Safety National
After pivoting its volunteering efforts throughout the pandemic, Safety National was thrilled to return to its in-person Days of Service in 2021! Each year, the company gives its employees a paid half day to volunteer at local agencies throughout the community, including animal shelters, child outreach programs and senior services. This year alone, the organization had 356 employees volunteer at 36 agencies, donating a collective 1,068 hours of service. Safety National also made significant contributions to food banks and hosted virtual fundraising events to support nonprofits.
Pennsylvania Lumbermens Mutual Insurance Co. Throughout Pennsylvania Lumbermens Mutual Insurance Co.’s (PLM) 126 years in business, the organization has been dedicated to giving back and volunteerism in the Philadelphia community and beyond. Every year, PLM partners with the United Way for a month-long giving campaign, and this year’s was one of the most successful. More than 150 current PLM employees pledged a total of $79,895 to 167 organizations. PLM matched up to $2 for every $1 contributed by staff members. Combined with employee pledges, fundraisers, PLM matches, and donations from retirees and PLM’s board, PLM raised approximately $225,000 for the United Way in the 2021 campaign. INSURANCEJOURNAL.COM
SageSure
On Oct. 8, SageSure joined forces with the Arbor Day Foundation’s Community Tree Recovery Program to distribute more than 750 trees in Onalaska, Texas, which was devastated by a tornado in 2020. 600 trees were distributed directly to residents, the remaining 150 went to Boy Scout and 4H groups for planting in neighborhood greenspaces. In SageSure's initiative launched in early 2021, for each policyholder who enrolled in the paperless option, the company contributed $1 to the program. During the campaign's first half, 27,000 policyholders supported Onalaska through paperless enrollment.
PCF Insurance Services In light of 2021's "Great Resignation," how can companies maintain the best and brightest when the workplace is changing rapidly? The holidays provide a perfect opportunity for employers to show thanks and appreciation for the employees they have and to potentially recruit other talent. Case in point: Employees at PCF Insurance Services were seen crying at their desks recently. But it might not be why you think. The company announced its management team has gifted $8.2 million to be equally distributed among nearly 1,800 employees — a $5,250 bonus going into the holiday season; employees were overjoyed. The announcement follows the completion of PCF’s management and partner-led buyout from financial sponsor HGGC, which valued the business at more than $2.2 billion. INSURANCEJOURNAL.COM
IICF Western Division In 2021, IICF’s Western Division awarded more than $379,000 to 55 unique organizations across the western United States. During IICF’s 2021 Week of Giving, 50 companies from across Arizona, California, Colorado, Oregon and Washington came together to support 53 local nonprofits. Approximately 1,000 volunteers provided nearly 1,900 hours of service, packaged more than 91,000 meals across four states and sent more than 1,000 cards of encouragement to vulnerable individuals through Meals on Wheels San Francisco, The Giving Spirit and Our Military Kids. Beyond Week of Giving, volunteers generously supported other activities throughout the year.
CAC Specialty/Cobbs Allen Cobbs Allen and CAC Specialty take part in several charity initiatives throughout the year, working together to make a larger impact. Earlier this year, Cobbs Allen supported United Ability Day by wearing t-shirts to show unified support for United Ability’s efforts to help individuals with disabilities through their mission of empowering individuals of all abilities to lead meaningful lives. The campaign raised $1,330. CAC Specialty volunteered with A Precious Child — a Denver-area nonprofit that provides opportunities and resources to children in need — helping to sort, hang, size, prepare and re-stock some 1,785 pounds of donations.
Atlas Insurance Agency The American Heart Association (AHA) Heart Walk 2021: Led by Risk Consulting Manager Joey Barroso, 50% of Atlas Insurance's employees joined in The American Heart Association’s Hawai'i Heart Walk Challenge by monetary donation and participation in push-up, squat and step challenges to raise awareness about heart health. Nearly 50 Atlas employees also participated in Go Red Day by wearing red and changing their virtual backgrounds to share the American Heart Association’s message about the importance of prioritizing health. To date, Atlas employees have raised over $4,100, which will be matched dollar for dollar by the Atlas Foundation. The foundation also donated an additional $10,000, for a total donation of over $18,000.
Intact Insurance Specialty Solutions Through Intact Insurance Specialty Solutions’ virtual Community Engagement Program, teams from the Boston, Denver and Plymouth offices selected local nonprofits that focus on building economic resiliency for disadvantaged communities — Boston: United South End Settlements/USES; Denver: Denver Kids; and Plymouth: UpTurnships. The teams meet with these nonprofits’ leadership, connecting them with local staff for “expertise-sharing” sessions, and affirming Intact's commitment through financial donations. Community events, such as the Plymouth team’s annual Toys for Tots holiday drive, complement the program. Intact looks forward to nurturing these new partnerships and expanding its program to other U.S. locations in 2022!
United Valley Insurance Services United Valley Insurance Services has supported the O.L.I.V.E. Charitable Organization since 2020. O.L.I.V.E. (Overcoming Limitations through Intervention, Value and Empowerment) in Madera, California, has a mission to end sex trafficking. It assists women who have been victimized by sex trafficking. O.L.I.V.E. acquired an office building in 2019 and began converting it to a five bedroom safe house for survivors. In early 2021, the United Valley team helped move items from O.L.I.VE.’s storage unit into the safe house. United Valley also provided a corporate sponsorship for one of the rooms at the recovery home.
ProNavigator Eleven years ago, Joseph D’Souza, founder and CEO of ProNavigator, founded Start Early India, a preschool dedicated to providing free education to underprivileged children living in the slums of Mumbai. The school's mission is to provide quality pre-primary education for less privileged children to prepare them for admissions in English schools. Founded in 2010, the school serves 30 to 40 students each year, and operates with two teachers and one project manager. "Despite India's vast natural resources and wealth, almost 60% of its population lives on less than $3.10 a day. Education, or rather, the lack of education, plays a significant role in this wealth disparity," D'Souza says.
DECEMBER 20, 2021 INSURANCE JOURNAL | 31
NATIONAL | Special Report | The Charity Issue
IICF Northeast Division Since its founding in 2007, IICF’s Northeast Division has awarded more than $10.7 million in grants to nonprofits supporting those in need. In 2021, the group's initiatives have encompassed many notable causes, including working with WomenRising, a nonprofit dedicated to supporting women and their families to live safe, fulfilling and self-sufficient lives. Most recently, IICF’s Northeast Division associate board held a winter clothing and Thanksgiving drive for WomenRising. Additionally, IICF awarded WomenRising $5,800 in grant funding in 2021 to support their important work.
Insureon Insureon Cares is an initiative spearheaded by members of Insureon’s Culture Committee and Diversity & Inclusion Council, with a focus on charitable contributions, fundraising and other ways to help the Insureon team give back to the Chicago area and beyond. The initiative began as a virtual food drive to benefit the Greater Chicago Food Depository in November 2020. The Insureon team put its focus not on the amount of funds raised, but on empowering as much of the community to make donations as possible, with more than 57% of team members participating and over 71,000 meals funded as a result. The company hopes to beat its own record with its 2nd annual food drive that wraps up in December.
Newfront Newfront's passion for providing unmatched service extends to serving communities across the country. On a corporate and an individual level, Newfront is about giving — and giving back — to make communities better, stronger and healthier. It supports a range of nonprofit organizations and causes in three key areas: Education, Citizenship, and Health and Wellness. Through partnerships and sponsored events, and with volunteers from its team, Newfront provides opportunity for students to explore future STEM careers; combats hunger and homelessness; and supports advanced research into treatments for serious diseases.
INSURICA INSURICA colleagues participate in many charities within their local communities. Whether it's building a house with Habitat for Humanity, supporting the Wounded Warriors Project, or helping out at Ronald McDonald House, local INSURICA colleagues are invested in helping others.
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Kapnick Insurance Kapnick loves giving back to community! The firm provide individuals with paid volunteer time off, encourages team members to give of their time and talents, and participates as an organization in various events. This year's company-wide volunteer opportunities included clearing blight with Life Remodeled in Detroit and the United Way of Washtenaw in Ann Arbor, and decorating family visitation spaces for the holidays for children in foster care with Fostering Solutions in Adrian. The Kapnick Cares committee, made up of Kapnick colleagues, drives the firm's commitment to serve the communities where it does business.
Chubb Celebrating its 21st year, the Chubb Charity Challenge annual golf tournament raised funds for local charities across North America. Between 2000 and 2021, more than 5,200 teams participated in the Challenge, raising nearly $18 million. In 2021, almost 300 teams raised over $700,000 for their charities of choice. The Chubb Charity Challenge unites Chubb partners, clients and colleagues by teaming up with those in need. Agents, brokers and clients play in local tournaments organized by Chubb branch offices. Each team plays on behalf of a local charity of their choosing. Teams from all over North America competed in the Chubb Charity Challenge 2021.
The Horton Group
The Horton Group supports Big Shoulders Fund, an independent charitable organization that helps inner city schools provide quality, values based education for Chicago's children. In July 2021, Horton employees helped one school with various projects, including cleaning classrooms, setting up supplies for the teachers and cleaning out the school library so it could be remodeled. Aiming to strengthen schools and communities, and prepare students for lifelong success, the Fund supports four major areas: scholarships/enrichment; academic programs; leadership development and operational improvements.
Morris & Garritano Morris & Garritano has found one of the best ways to live out the agency's mission of building collaborative relationships is by supporting organizations that make a difference in the lives of its clients and communities. Standing out among its numerous contributions this year is the virtual Walk for Healing campaign for Hospice SLO, a volunteer hospice serving San Luis Obispo County residents who are facing a life-limiting illness, end of life, or grief. M&G sponsored the event and pledged to donate $1 for every mile walked up to $1,000. In total, 45 team members participated, logging over 4,000 miles walked, and raising over $3000! The agency also has an annual tradition of fundraising for the Hearst Cancer Resource Center and has raised almost $10,000 in total. INSURANCEJOURNAL.COM
Shepherd Insurance
Shepherd Insurance is as passionate about community service as it is about providing exceptional service. That’s why CEO Quinn Shepherd started Operation Shepherding in 2011 as a year-round initiative to support the local communities where employees and clients live and work. The agency encourages team members to look for opportunities to pay it forward and to be actively involved in the community. Employees are given two days off work annually to volunteer with organizations of their choice. With over 30 offices and 400 employees, the firm serves hundreds of nonprofits each year through donations and service.
AssuredPartners The AssuredPartners' Nashville office put its AP Cares program into place after devastating floods hit Waverly, Tennessee. The team tapped into all their sources and went to work collecting items for the victims of the flooding. They collected paper products, household items, diapers, personal hygiene items, food and bottled drinks. The team successfully collected a tremendous amount of assorted items to donate to victims of the flooding, many of which had lost everything in their homes and needed necessities like toothbrushes, deodorant, cleaning supplies, paper products, food, and water. AssuredPartners' AP Cares program is utilized to give back to its local communities.
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Sterling Seacrest Pritchard Sterling Seacrest Pritchard partners with many foundations across the Southeast, providing both financial support and hands on volunteering. Organizations supported in 2021 include: 2nd Harvest; America’s Second Harvest of Coastal Georgia; Atlanta Mission; Big Brothers Big Sisters of Metro Atlanta; Employability; Goshen Valley; Hillside Inc.; Historic Savannah; Hospice Savannah; Junior Achievement; Leukemia & Lymphoma Society; Lady Bamford Early Childhood Center; Loop It Up Savannah; Make a Wish; March of Dimes; Northside Youth Organization; One Love Animal Rescue; Operation HOPE; and Park Place Outreach Youth Emergency Shelter.
QBE North America The QBE North American team worked to help restore oyster reefs in New York Harbor, which provide habitat for hundreds of species and protect against storm damage. Volunteering with the Billion Oyster Project, New York employees gained knowledge and hands-on experience with oyster restoration by building oyster hatches to repopulate the New York Harbor. Oysters are functionally extinct there due to over-harvesting, dredging and pollution. Restoring oysters and reefs will restore the marine ecosystem’s natural mechanisms for maintaining itself, resulting in cleaner water and greater biodiversity. The QBE team holds the corporate record for the most oyster hatches — 11 — built during a single volunteer session. The QBE Foundation also contributed $3,000 to this important organization.
CapSpecialty CapSpecialty is committed to volunteering in the communities where employees live and work. CapSpecialty affords each employee 16 hours of paid time off annually to volunteer. With a focus on food insecurity, the firm has coordinated its efforts with four food banks across the country. In Hartford, Kansas City, Middleton and New York, CapSpecialty’s Charitable Giving Committee organizes monthly volunteer days at local nonprofits whose mission is to address food insecurity in the local community. These opportunities help employees give back while working with their colleagues outside of the workplace.
AmTrust AmTrust Financial Services Inc. — a multinational property/casualty insurer specializing in coverage for small businesses, with an emphasis on workers' compensation — launched AmTrust Gratitude in 2020 to show its appreciation for essential workers. The effort, which continued into early 2021, was spurred by the COVID-19 pandemic and aimed at thanking first responders, healthcare professionals, teachers and nonprofits for their efforts to keep communities healthy and safe. AmTrust and its agent partners raised and donated $50,000 to 30 different organizations in 10 cities across the U.S. The donations went beyond financial resources and included hand sanitizers, meals, masks and other supplies. AmTrust also purchased gift cards to local restaurants and donated them to first responders.
Sentry Insurance Sentry employees are dedicated to the communities where they live and work. In 2021, they rallied together, raising a company-wide record of $1.575 million for United Way through donations and spirited fundraising events. Sentry’s United Way campaign is a proud tradition, and one that helps address local needs in the areas of education, financial stability and health, among others. Since 2000, Sentry has contributed more than $18.7 million to its local United Way, the United Way of Portage County in Wisconsin.
Lockton Companies Giving back to the communities where employees live and work is a key pillar in Lockton’s culture, and 2021 was no different. Lockton and its associates donated over $14 million globally to local organizations and causes that hold significance to team members. In 2021, Lockton’s U.S. associates donated millions of dollars and countless volunteer hours to over 200 organizations ranging from veteran and first responder nonprofits to local food pantries and shelters. The company also donated over $2 million to local United Way chapters in 2021. As the needs of the company's communities evolve, so does Lockton's strategy, and the firm will continue supporting those in need into 2022 and beyond.
DECEMBER 20, 2021 INSURANCE JOURNAL | 33
NATIONAL | Special Report | The Charity Issue
InsuranceHub Leavitt Agency InsuranceHub Leavitt President Jim Lloyd combined his love for BBQ competitions and charity work by organizing the Sip and Swine BBQ Festival. Now in its sixth year, the two-day fundraiser draws more than 12,000 people who come to enjoy live music, beer, arts and crafts, and a variety of good food. This event is held at Coolray Field in Lawrenceville, Georgia, and 100% of the proceeds go to The Home of Hope at the Gwinnett Children’s Shelter. The Home of Hope assists homeless children and their mothers by providing them with shelter and a safe place to stay. So far, the Festival has raised more than $400,000 for The Home of Hope.
Risk Strategies Through the Risk Strategies Foundation, the company provides financial support for programs, organizations and families in the communities where it does business, and employees are encouraged to actively participate in charitable activities in their local communities with paid time off for community service. Risk Strategies supports organizations that make a difference in healthcare and disease research, poverty, disaster recovery, education, youth development, scholarships, human rights, special needs and more. In 2020, overall donations exceeded $750,000. Risk Strategies' annual 2021 Foundation Golf Tournament raised more than $100,000 to fund the foundation and support a wide range of charities.
NFP NFP has helped Project Wish List raise total of $1 million to support at-risk children in public charter schools in the Washington, D.C., area. Along with Katherine Bradley, a DC-based philanthropist and founder of CityBridge, the firm approached 12 local schools to put together a “wish list” of things they needed to continue their missions. Some projects/schools funded include Rocketship, an instrumental music program; Digital Pioneers, focused on extracurricular sports, activities and clubs for students; and DC Bilingual, which provided mental health counseling for its teachers. NFP also donated $100,000 to Project Wish List.
Tokio Marine Group In 2021, eight Tokio Marine Group companies joined together to form a national team for the Walk to End Alzheimer’s. Together, they served 27 local communities and raised over $50,000 to provide resources and research to those affected by Alzheimer’s and other forms of dementia. Tokio Marine Group employees participated in virtual or in-person walks with their family, friends, and colleagues — all in support of this one unified mission. Participating companies included First Insurance Co. of Hawaii, Philadelphia Insurance Cos., Safety National, TM Claims Service, Tokio Marine HCC - Surety Group, Tokio Marine America, Tokio Marine North America Services, and WNC Insurance Services.
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Aon
In 2021, Aon introduced a solution to maximize distribution of the COVID-19 vaccine, committing all 2021 revenues earned from it — a minimum of $100,000 — to the COVID-19 Solidarity Response Fund powered by the WHO Foundation and the United Nations Foundation. Colleagues supported their communities by repurposing Aon t-shirts into face masks; providing care packages for children in lockdown; packaging more than 700 food hampers and delivering 1,500 meals; raising funds for VaccinAid; supporting #StayStrongIndia; and donating to United Way.
Zenity Insurance Zenity Insurance owner Edie Crow first got involved with Childhaven before the pandemic hit. Initially planning to cook dinner for the Farmington, New Mexico, children’s shelter once a month, those plans changed as COVID shut everything down. Pivoting to meet Childhaven's changing needs, Crow remained active — often jumping in to provide clothes or personal items for the many children brought into the shelter without them. Crow’s ongoing support of Childhaven earned Zenity Insurance a 2021 Make More Happen Award, which included a $10,000 donation from Liberty Mutual and Safeco Insurance to Childhaven. Zenity secured two additional matching donations, raising a total of $30,000 for the nonprofit.
McClain Insurance Services
Every night, up to 400 teens in Snohomish County, Washington, are homeless. For 30 years, Cocoon House has been the only organization in the area to serve them. The pandemic prevented Cocoon House from accepting homemade meals from community members. So, for seven months, the McClain Insurance Services team purchased and delivered meals from local restaurants every week, helping McClain earn a 2021 Make More Happen award and a $10,000 donation from Liberty Mutual and Safeco Insurance to Cocoon House. Another local business matched the gift, bringing the total donation to $20,000.
KMRD Partners Human Capital and Risk Management A hard-working band of more than 2,050 volunteers joined KMRD Partners Human Capital and Risk Management, based in Warrington, Pennsylvania, at Delaware Valley University to pack lifesaving Manna Pack meals for starving children. In coordination with the 2021 Central Bucks MobilePack, during a four-day span volunteers packed 2,147 boxes of food for a total of 463,752 meals. While it feels good to do good for others, the real winners in all of this were children around the world suffering from the effects of starvation and malnutrition. In four days and 25.5 hours of active packing, volunteers packed enough food to feed a meal a day to 1,270 kids for an entire year. INSURANCEJOURNAL.COM
National Insurance Industry Council Pressed on Though Pandemic to Help City of Hope By Don Jergler
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nsurance and fundraising are both people-facing endeavors, so one would think that COVID-19, with all of its lockdowns and distancing, would have killed the giving spirit for a charitable group like the National Insurance Industry Council and its goal of raising money for the City of Hope. However, the NIIC persisted and continued to raise funds and awareness for the renowned research institution, as did other industries this year — and as a whole, they did so at a record pace. In 2021, donors and volunteers helped raise a record-breaking $260 million for City of Hope, according to the Duarte, California-based research facility. “For the industry groups in total, philanthropy for the City of Hope was our two best years ever,” said Ken Birkett, director of development for NIIC for the City of Hope. NIIC this year moved its annual Spirit of Life Gala
online, and the Oct. 21 event reportedly raised more than $800,000 towards City of Hope’s research and cures. The Spirit of Life Gala is NIIC’s key annual fundraising initiative. Each year an honoree is selected for work done in their profession and for their philanthropic efforts. The honoree is given The Spirit of Life Award, City of Hope’s top honor. In 2021, the NIIC honored Tim Turner, president of Ryan Specialty Group, and chairman and CEO of RT Specialty. Past recipients include: Mike Miller, president and CEO of Scottsdale Insurance Co.; Christopher J. Swift, chairman and CEO of The Hartford; and Tony Markel, the name and the man behind building Markel Corp. During the pandemic, NIIC was able to pivot its events to a virtual landscape — Virtual Hoops for Hope and a Virtual Wine Tasting. However, Birkett said he’s hopeful to be able to get live events back soon — because he believes that's the best way to
Researchers at the City of Hope work on cures and treatments for cancer, diabetes and other diseases. The National Insurance Industry Council this year continued working on its goal of raising money for the Duarte, California, research facility. network and raise funds. “I think people really want to get together. I think they’re looking to get back to in-person events,” he said. “They want to talk to each other, experience each other in person rather than just in front of a Zoom camera.” With that in mind, Birkett and his group are already planning some new things for next year.
‘We need to reengage Southern California.’ They are of course looking for a new Spirit of Life honoree, and searching for companies that want to get involved, but NIIC is also working on plans to have an additional smaller-scale luncheon and honoree in the Los Angeles area this year to further engage the insurance community in the region.
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“We need to reengage Southern California,” he said. Among other initiatives, City of Hope researchers are furthering the development of a new vaccine, funded by a first-time gift from the Carol Moss Foundation, that aims to provide lasting immunity from COVID-19 to cancer and transplant patients. A Phase 2 clinical trial is currently enrolling patients. Other City of Hope achievements include: • Numerous breakthrough cancer drugs. • Millions of people with diabetes benefit from synthetic human insulin, developed at City of Hope. • The facility was a pioneer in bone marrow and stem cell transplants. • Surgeons at City of Hope have performed more than 10,000 robotic procedures for prostate, kidney, colon, liver, bladder, gynecologic, oral and other cancers.
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Idea Exchange: The Competitive Advantage
Is Selling Insurance
a Profession? A
“profession” is defined by MerriamWebster’ Dictionary as:
1: the act of taking By Chris Burand the vows of a religious community 2: an act of openly declaring or publicly claiming a belief, faith, or opinion : protestation 3: an avowed religious faith 4: (a) A calling requiring specialized knowledge and often long and intensive academic preparation. (b) A principal calling, vocation, or employment. (c) The whole body of persons engaged in a calling. A different definition from Word is more succinct: “a paid occupation, especially one that involves prolonged training and a formal qualification.” A good friend sent me an e-mail regarding an article I wrote entitled “Doing the Right Thing” with the “Right Thing” being offering clients the coverages they really need. As he noted, “Letting people know what they need is the essence of our profession!” I received a solicitation email from another friend now working for an IT brokerage selling insurance. It was just a general email. It said, “We got a customer a GL policy quoted and bound in 20 36 | INSURANCE JOURNAL | DECEMBER 20, 2021
minutes.” It is physically impossible to determine what coverages a client needs in 20 minutes and if all you are selling is a GL policy, you have failed to determine what coverages a client needs because a GL policy is inadequate coverage about 99.9% of the time. So, is the industry a profession? Selling inadequate coverage and doing so quickly does not require specialized knowledge. It does not require any academic training, much less long and intensive preparation. It does not require a principal calling. It does not really require any formal qualification. In fact, I am not sure states should even bother licensing BOTS but should require BOTS to identify that the insurance is being sold by a non-professional. The states could make up the revenue loss by charging a special BOT fee. Truly professional agents need to and must work with their associations and in particular, their carriers in some cases, to distinguish the difference between selling insurance that is almost certainly inadequate and professionally evaluating the coverages people need and then offering solutions to those exposures. Another article I recently wrote regarding the need for agents to read the policies they sell received firm responses from professionals stating that selling unread policies is completely wrong. One must know the policy they are selling if they are to sell the coverages clients need versus simply selling clients a policy. The problem with insurance is how it is priced. Everyone gets the same INSURANCEJOURNAL.COM
price regardless of whether the agent is incompetent. When the NAIC first formed, it could not have anticipated automated quoting. For fairness, everyone should get the same price. Now, however, the difference between the quality of selling inadequate coverage quickly and selling competent, correct coverage is so large that the aggressive purveyors are taking advantage of these rules so that customers are actually being taken advantage of by these rules. I like what Progressive has done by filing different rates and different commission rates so that consumers can see the value (or lack of value) of agents earning their commission. More carriers should consider following this approach. I know some agents hate it and they hate it because it exposes the fact that they don’t really bring any value to the consumer and this commission/price ladder forces them to expose themselves as amateurs. Really good agents dislike this system for the opposite reason: they get tired of explaining why they are worth the extra commission! As a result of the NAIC rules, professional agents are not paid enough through commissions and inadequate agents are always overpaid. Carriers are struggling to cut expenses and are overpaying incompetent agents by at least five full percentage points. There is the savings. Truly professional agents are underpaid by probably two to five percentage points and because fewer competent agents exist than incompetent agents (as defined by not knowing the policies they are selling and not taking the time to learn what coverages their clients need), the net savings will likely be about two full percentage points. For those who don’t know carrier financials, two full points may be the difference between success and going out of business (not insolvency but selling after a long slow demise). Otherwise, professional agents need to charge fees (carriers should still cut INSURANCEJOURNAL.COM
the commissions of incompetent agents because they are overpaying them). Keep in mind, I am not just throwing bombs. My perspective is based on interviewing and reviewing the results of thousands of producers including reviewing their practices per E&O audits. In other words, my perspective is real world. Professionals and amateurs are paid very differently in almost all industries. Why pay a BOT or an agent selling inadequate coverage very quickly the same as a true professional who truly takes care of a client? I don’t think the industry can be classified as a “profession” given the large proliferation of sellers of insurance focused only on the sale rather than the care of the client. We may have professional level players within an amateur industry, but we do not have a professional industry. To fix it, assuming anyone wants to fix it, insurance commissioners could create a true professional license. I once proposed a fix to a former insurance commissioner and he advised that if I went public with my recommendation, insurance commissioners would come for my head because they did not want the public to realize how little an insurance license really meant. Also, per a Michigan judge who ruled something to the effect in an E&O case that agents can’t be considered professionals given how few hours are required to obtain a license versus the hours required by a person wanting to do nail care. State agent associations could lobby for differential licensing. That might happen but is unlikely. Carriers could follow Progressive’s lead, and some will. Otherwise, truly professional agents need to create a boutique advisor service for a fee. The standard of care will be high, but lucrative. A professional must elevate themselves because everyone else is motivated to minimize the difference between the professionals who have dedicated themselves to helping clients obtain the coverage they really need and those who are just selling insurance. Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-4853868. E-mail: chris@burand-associates.com. DECEMBER 20, 2021 INSURANCE JOURNAL | 37
Idea Exchange: Ask the Insurance Recruiter 12 Hiring and Recruiting Ideas for Insurance Organizations
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or my last column of 2021 I’m mixing seasonal flavor (cue the 12 Days of Christmas song) with the idea behind Insurance Journal’s annual list of 101 Sales, Marketing and Agency Management Ideas. While mine isn’t as extensive as theirs (101 ideas, you kidding me?!) I think 12 is a good starting point to help you start conversations, brainstorm ideas and find ways to adapt your hiring and recruiting.
1. TikTok & Instagram....Your New Social Media Platforms.
As my teenagers so plainly tell me, “Mom, Facebook is for old people.” Online change is constant. Try out job advertisements and promotions on new, insurance specific job boards or through Instagram and TikTok (where the young people hang out).
2. Create a Showstopping Advertisement. Job ads
should not be a regurgitation of HR job descriptions. It’s too long and painful for candidates to read. Ads should be job highlights with creative writing mixed in, i.e., an emotional connection, call to action, sense of belonging or intrigue.
3. $5,000 for Employee Referrals. How much would
your referral bonus need to be before it equals a recruiter fee? The answer is a lot more than $5,000. Gone are the days of $250$500 bonuses. Offer contests, rewards, trips, straight cash ... and watch your referral quantity and quality increase.
4. Return to Campus Recruiting. Why do we
assume only Human Resources has to be at job fairs? Bring your new, rising stars from sales and service back to “tell and sell” their story about an insurance career.
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5. Leverage Associations for Recruiting Help.
Inherently resource-minded, associations offer hiring tools and support. Some have cost-friendly job boards. Many can like/ share/retweet your job posting to a broader insurance audience. Others have preferred provider discounts negotiated with outside recruiters.
6. Avoid Paying a “Stupid” Tax. The mentality of always
finding new candidates is a distraction from building a candidate database. If you don’t stay engaged with previous applicants eventually that person will come back around through an outside recruiter. Then, you’ll pay a fee for a candidate you knew but hadn’t considered. A plan to revisit and reengage candidates leads to less reliance on job postings and external recruiters.
7. The “Blame Game” Chips Away at Your Success. The
#1 complaint between hiring managers and HR is the same — both think the other party slows down the hiring process. Sourcing candidates is hard work. Ask the question, “What is working and what is not in our hiring process.” Use that introspection to seriously address process improvement.
8. Define a “Best in Class” Interview Experience.
The same reason you buy products on Amazon with 5-star ratings is why this topic is so important. People apply to jobs with highly rated companies. Pull up (and clean up) your Google and Glassdoor reviews. Promote employee testimonials on social media. Find ways to create a better engagement experience.
9. Job Seekers Care About Salary & PTO. Salary bans. Pay equity laws.
Compression. From regulation to retention, you’re being forced to sell job seekers on price whether you want to or not. Compensation By Mary Newgard and PTO are selling points that you must lean into during the ad writing and interview process.
10. 100% Remote. If you
abhor the idea of full-time remote employees, then you’re in for a long and hard recruiting road. It takes three times longer to fill jobs if you will only hire in a single location. If you don’t feel a sense of urgency to fill a job quickly, leave it to one location indefinitely. If you need to make a quick and quality hire, you have to expand location.
11. Internal Recruiters Need Training Too. You provide
training and mentoring to producers, but what about your internal HR/talent acquisition? Recruiting is sales. Burnout among internal recruiters is real. It’s important that you find coaching resources to help them develop skills and career longevity.
12. Set Boundaries & Expectations with External Recruiters. If you don’t think
an outside recruiter talks to candidates let alone screens them prior to making the referral, fire them. Why accept substandard work? Create Master Service Agreements. Outline what constitutes a real referral. Establish advantageous guarantee terms.
Newgard is partner and senior search consultant for Capstone Search Group, a national recruiting firm dedicated to the insurance industry. Email: asktherecruiter@ csgrecruiting.com. INSURANCEJOURNAL.COM
Idea Exchange: Best Practices Returning to the Office During a Pandemic
By Robert Sullivan and Dr. Adam Seidner
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here’s no question that the COVID-19 pandemic will have a lasting impact on the workforce. It has caused millions of businesses and employees to shift to a virtual work environment. But as the COVID-19 vaccine rollout continues and more people get vaccinated, employers are starting to think about when and how to have employees return to the office. But it’s not as easy as waiting until vaccine numbers increase before employees can return to work. As employers plan to reopen their office buildings and welcome back employees to their workplaces, COVID-19 continues to be challenge they must work through. From safety measures and vaccinations to the potential discovery of another new variant, businesses and employees have to adjust to a new normal as they get back inside the office building.
Can Employers Mandate the Vaccine?
According to various news reports, companies in different industries have recently announced vaccine mandates for employees returning to work. Under federal equal employment opportunity laws, employers can require employees who enter the workplace to get vaccinated. However, businesses have to offer reasonable INSURANCEJOURNAL.COM
accommodations to employees who don’t get the vaccine because of disabilities, religious beliefs, or pregnancies so long as it does not pose an undue hardship on the operation of the employer’s business. If a business decides to mandate vaccines for employees going back to work, it is important to be vigilant in researching the laws and legal guidelines because it can open a business to legal risks. Because some individuals or demographic groups may face greater barriers to receiving the vaccine than others, employers need to consider whether the mandated vaccine policy will disparately or disproportionately impact employees based on a protected category. Employers should also be aware of local laws and regulations. Montana, for example, doesn’t allow businesses to discriminate based on a person’s vaccine status or having an immunity passport. And similar bills may pass in other states.
Vaccinated and Unvaccinated Workers
If any employee is hesitant about getting the COVID-19 vaccine, providing education and communication is key. The Centers for Disease Control (CDC) says there are many factors behind why someone doesn’t get vaccinated, but that confidence in the vaccines, the vaccinator and the system all support the decision to get a vaccine.
To help businesses build vaccine confidence among employees, the CDC has resources and key messages available. However, it is important to be aware that quarantine and isolation recommendations can change for fully vaccinated people, and it is good idea to regularly check the CDC for the most recent guidelines for vaccinated people as well. But as effective as the vaccines are against COVID-19 and the current variants, employers reopening their offices should also consider workers that aren’t getting vaccinated. They must think about how to keep all employees safe, and whether it is necessary for employers to consider mandating the COVID vaccine for their remote workforce. From following health and safety guidelines to providing accurate communications and resources, there are several strategies that employers can adopt to ensure the safety and health of their workers. This includes eliminating the virus from the workplace by having a policy to keep sick workers at home. In addition, building owners can install engineering and environmental controls such as regular cleaning, plexiglass barriers, air exchanges, and new HVAC systems to mitigate exposure. And there are administrative controls that may be implemented such as staggered presence in the workplace, limited meeting size, smaller conference room use, selective travel, and having personal protective equipment readily available. All these controls require training and education of all employees, but transparency is key. And it’s important to have a strategy so there are no surprises.
Pay Attention to Employees’ Psychological and Behavioral Issues
Working virtually for an extended period, combined with local restrictions and ongoing news of the pandemic, may have also affected employees’ mental health and wellbeing. Workers coming back to the office aren’t the same workers as pre-pandemic.
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Idea Exchange: Agency Management The COVID Era: Finding Opportunity in Times of Hardship
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he COVID-19 pandemic isn’t a short-term event. That’s obvious. But the question should no longer be — “when will it end?” By Tony Caldwell As a practical matter, it’s not going to end. When we ask the question “how long will it last?” which is what we have been asking these past 18 months or so, we aren’t asking the right question. We have been and still are missing the bigger picture. That’s what I want to talk about.
A New Era
COVID-19 isn’t a crisis anymore — it’s an era. An era is a period of time that’s usually fairly long and is only understood in retrospect. An era may be triggered by a unique event, but it’s usually subject to a period of preparation first. Living through an era changes the way people see the world, the way they act, what they value and how they interpret the future. I’m going to get to how all of this will impact your agency in just a second, but some background is important. Stay with me a minute! As an example, consider World War II — clearly a defining period of time in history. From the American perspective, it lasted from 1941 to 1945. But looking back on it as an era, it lasted much longer. It’s undeniable that this event changed the way Americans viewed the 40 | INSURANCE JOURNAL | DECEMBER 20, 2021
world. It certainly changed their economic behavior, among other things. People who lived through it behaved differently afterward. They saw and interpreted their futures much differently. It’s also clear that all of this change was heavily influenced by the Great Depression that preceded the war. Now, let’s look at the COVID-19 era. What parts of this experience have influenced us in how we are moving forward? It’s clear that individual reactions, particularly in terms of vaccination, mask wearing, school and business closings have varied and unfortunately, led to division. In my opinion, what paved the way for this division was a certain egocentricity that had been creeping into the culture long before COVID-19. This contrasts, obviously, with the spirit of self-sacrifice that the Great Depression set before the World War II era. An increasing reliance on technology helped set the stage for the COVID era, as well as a very interconnected global economy. In terms of insurance agencies, the looming crisis of employee aging, retirements and changing consumer behaviors all contributed to both how agencies were able to react to the pandemic, and how they will continue to navigate and contribute professionally to the COVID era over the next few years.
Societal Changes Borne of the COVID Era So, what will the hallmarks be of personal and societal behavior in this period? Here’s what I think.
Economic conservatism will increase. Individuals now know firsthand
how quickly their economic world can turn upside down. This should lead to permanent increases in personal savings. People will become more conservative in personal, financial risk taking. We’re seeing this already. In terms of insurance, the COVID era presents an opportunity to engage with clients about risk. It gives great agents a unique opportunity to increase their own value proposition beyond price. Products like life insurance will be top of mind for years. Disability insurance, especially those products that pay when someone is unable to work due to illness, will be more popular. In a broader sense, people will want to understand their risks and find ways to mitigate. This presents a huge opportunity for relationship building.
A rise in “Carpe Diem” behavior.
Seizing the day becomes more important in a period when the future is less certain. This means clients are less willing to accept inferior products and service, and more willing to move business away from providers who leave them frustrated. We’re already seeing evidence of this trend with “The Great Resignation.” People are quitting their jobs, changing employers, or sitting on the sidelines. Already facing an aging workforce, the COVID era has also prompted retirements within the industry. This trend creates tremendous risk for agencies that don’t recognize it and adapt. Flexible work is becoming the norm. The COVID-19 pandemic has been tough for parents, and women have been disproportionately impacted in terms of work and career. With women making up the majority of the agency distribution system, it stands to reason that this continued demand for flexibility will significantly impact our business. Agency owners who consider flexibility will do better than those who do not. INSURANCEJOURNAL.COM
Technology will continue to open new doors.
The use of communications technology was fairly old-school until the spring of 2020. Then, Zoom exploded during lockdown mandates related to the COVID-19 pandemic. The universal adoption of video communication was presaged in my youth in comic books. While it was used somewhat in some larger corporations, video communication wasn’t taken seriously — until it was. Now, those who insist on just having a “phone call” are often taken less seriously. Agents therefore must become experts at video communications and embrace this and technological trends like it. But, also critical to note in terms of technology is the geographic doors the COVID era has opened related to an agency’s opportunities for growth, size and profitability. Agencies are no longer limited to their local labor force or cost structures. This is a great opportunity but again, also a threat for those who don’t adapt. Already, business owners struggling to find qualified employees are learning, to their chagrin, that other employers competing INSURANCEJOURNAL.COM
for the same talent can easily come from anywhere and take their best people.
‘We are lucky to be living in a time of change.’ Global realignment of supply chains, manufacturing and travel mean permanent increased opportunity. Simply put, agents who are aggressive commercial lines producers could reap the benefits from the fact that these issues will lead to the creation of more U.S. based businesses. Even if your agency doesn’t write manufacturers, an increase in manufacturers will drive increases in all kinds of business. So, while the short-term economic outlooks may be confusing, just as they were immediately after World War II, they are bullish for the long term. Now, is the time to prepare.
Finding Success in the COVID Era
COVID-19 will be with us permanently — both as a disease and as a stimulator of permanent change. Above, I’ve discussed those changes I think are the most obvious. Over the next couple of years, other
changes borne from the COVID era will also become clear. To keep your business relevant and growing, consider the following: • Pay attention to how larger trends are impacting you. • Adapt quickly to the needs of both customers and employees. • Experiment with work, marketing and products. • Be willing to let go of past practices that no longer work. We are lucky to be living in a time of change. Yes, much of living in the COVID era is painful as was the Great Depression and World War II. But, as the famed 18th Century Banker Baron Rothschild brutally pointed out, “the time to buy is when there is blood in the streets.” Indeed, periods of profound change can also be the periods of greatest opportunity for growth, profit and wealth building. Caldwell is an author, speaker and mentor who has helped independent agents create over 250 insurance agencies. Website: www.tonycaldwell.net. Email: tonyc@oneagentsalliance.net. DECEMBER 20, 2021 INSURANCE JOURNAL | 41
Idea Exchange: The Wedge
Why Sales Leaders Fail to Increase Sales (and 7 Things to Do About It)
A
few days ago, I had lunch with a young man who told me that when he was hired as a producer, his sales leader (CEO) said, “If you come work here, we’ll leave you alone.” Look, I understand this new generation of the workforce operates a lot different than before, but there’s a massive problem with this type of leadership style. By Randy Schwantz Sales leaders have a responsibility to their salespeople, not to leave them alone, but to help them gain clarity on their goals, long-term and short-term. Then help them come up with a legitimate plan to achieve those goals. And lastly, train and develop the skills and habits to make these intentions a reality. Nick Saban said it best, “Young people have the illusion of choices. But if you want to be good, you have no choices.” Most people won’t figure it out or do it on their own, which means it’s on us as leaders to inspire and put a system in place to make our people want to be successful. And truthfully, it’s a big win-win for both of you. Because when you help a producer develop the capability to achieve their goals and boost their confidence, they’ll grow fast and make great money. As a result, your firm becomes one of the best places to work. But not only that, your agency grows fast, which drives wealth for you and the other stakeholders (and that too is a worthwhile goal.) Recruiting new and mature producers to your shop becomes easier because it’s an upward power cascade of growth. To motivate your producers, you want
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to start big, then get small with their goals. There are a million different philosophies on goal setting. But unfortunately, not a lot tell you how to help your producers understand it as an agency sales leader. So to help you, here’s a quick goal setting process to help your producers grow their books.
7-Step Goal-Setting Process
1. Act like you’re a financial planner and get all the big stuff on the table. For me,
it was cars, universities, weddings, and retirement. Calculate how much you need to save annually to fund these necessary expenses. Warning: Be prepared because it will probably make you want to vomit as I did after learning I had to save $65,000 a year. But when you get over “the brutal truth” of how much it will cost, you can go to the next step.
2. Calculate “how much” you need to grow your book of business to throw off that much extra money. Here’s a quick
example: If I need an additional $50,000 after-tax to invest, I have to make that much plus the tax. If your tax rate is 30%, then invert that and divide the $50,000 by 0.7, and you’ll get how much money you need to make. In this example, it would be $71,000. So to make $71,000, how much do you have to grow your book? If you make a 30% commission on your book, divide that $71,000 by 0.3, and you’ll come up with about $233,000 of agency commission. 3. Create a four-year growth plan. Now that you know that growing your book of business by $233,000 will throw off $70,000 pre-tax and $50,000 after-tax, you can create a four-year growth plan. Divide the $233,000 by four years, and you’ll get $58,000 per year. And voila, exactly
$58,000 net growth every year puts you in control of your situation. 4. Now for the annual plan. How do you get $58,000 net growth? It’ll depend on your target account size, but just four accounts at $15,000 revenue, and you’re practically there. This step is where most producers realize they can’t keep writing small accounts because no one has the time to write and maintain hundreds of $100 to $200 revenue accounts.
5. Break it down into actionable activities. For you to win four accounts
at $15,000, how many do you need to submit, and how many new business appointments do you need? Figure out your current closing ratio, then move on to the next step.
6. Get your “right-fit” prospects into a database and start prospecting. Do
you have enough opportunities to get you to $58,000 net growth every year? If so, schedule your prospecting efforts on your calendar and start setting those appointments. If you don’t have a database, I highly recommend finding one that will help you stay organized to win more deals.
7. Tell your boss (both at home and work.) Show them what you have planned
and get them on your team to support you. You’ll need these people in your corner encouraging you throughout this mission, especially when things get tough. If you don’t communicate your plans, it’ll be more challenging for these people to understand why you’re doing this and where you’re going with the process. I hope this framework helps break down goal setting for you and your producers a lot easier. After starting this process over 20 years ago, it changed my focus, how I managed my days and how much money INSURANCEJOURNAL.COM
I made and saved. My mission is to help every insurance producer who wants to help themselves and gain clarity in their financial freedom. And look, money is not the secret to happiness. But almost everything you want for yourself and your family costs money. And a lot of you producers and sales leaders are in your prime time. Meaning, you’ve got the skills, ability, the marketplace, and resources to turn it on and provide this for yourself and your family. So if you’re going to make money, let it be on purpose. Schwantz is the CEO and founder of The Wedge Group. He’s also the author of the book Agency Growth Machine. Phone: 214-446-3209. Email: randy@thewedge.net. INSURANCEJOURNAL.COM
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Idea Exchange: Minding Your Business Industry Trends to
Exploit for 2022
I
By Catherine Oak and
t is imperative for agency owners to watch and learn about major trends when they start. Following are the eight key trends that insurance agencies should be tracking for 2022.
1. Insurtech Technology
Insurance and technology are like oil and water, they Bill Schoeffler don’t mix well. During the 1990s and 2000s, the industry was replete with reports that automation
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was going to change the business model. Things did change but the carriers were very slow to adapt and did so reluctantly. For the last five or so years, reports indicated that the industry will be “disrupted” by insurtech. Young tech entrepreneurs were going to totally change how insurance is done and create a new business model that uses technology to cut costs, improve products, and improve the client’s experience. Well, the immovable object (the insurance industry) did meet the unstoppable force (insurtech) and the stodgy insurance industry is standing (relatively) still. The heady days of new and disruptive insurtech startups is behind us. Many of the promising insurtech startups were based on “vaporware” meaning the main
improvement offered was marketing or perception rather than a substantial business model improvement using technology. Now that the dust has settled, the insurance industry and society, in general, are adopting technology as a part of the regular course of business. Pretty much everything is (or could be) cloud-based, and software is primarily mature and effective. The technology promises of the 1990s have arrived. Carriers, which were very slow to adapt to automation in the past, are expected to quickly incorporate new technology to improve their business model. Machine learning and AI will sort through and analyze all the “big data,” which will improve underwriting and cut costs. Blockchain (or
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distributed ledger technology) will seep into how business is done and offer greater transparency and security. Integration between the insurance industry and the wider ecosystem through application programming interface (API) will improve data, cut costs and result in better results for all parties. These are all evolutionary changes. If there is to be any “disruption” to the insurance industry from technology during 2022 and the next few years, it will be from technology changes to the world outside of insurance. For example, self-driving cars will change how auto liability insurance is handled. Technology such as sensors or artificial intelligence used in industrial equipment and consumer products will also change or shift the risk of losses. Healthcare insurance is also seeing many changes due to little things, such as fitness trackers, as well as big things, such as new surgical technology and telehealth.
2. Market Conditions
The current path shows hard market conditions to continue for early 2022 but conditions might change toward the second half of the year. The insurance market cycles between soft, or lower rates, and hard, or higher rates based on a variety of factors. 2021 saw an increase in losses for many lines, which drove rates up. In general, the frequency of losses was not up, but the severity (dollar amount) of the claims was the key driver. Natural disasters during 2021 played a role in the increases of losses. Societal factors (social inflation), such as more litigation and larger settlement values and judgment claims played another key role. The excess casualty insurers had significant losses during 2021. The market reacted to these losses by cutting capacity and raising rates. Changes and new entrants to the market during 2021 are taking a foothold and this could mean the hard market trend will flip to a flat, or even a soft, market for many lines within one year. However, many industry experts see certain segments, such as cyber to continue seeing rate increases, driven by the increases in ransomware losses. INSURANCEJOURNAL.COM
Carriers are being creative with underwriting and additional capacity is entering the market. Most likely the concern and impact from COVID-19 will stabilize during 2022 and the economy might chug along within an acceptable plus and minus bandwidth. Most of the trends right now appear to be favorable to bringing a higher level of certainty to the market. However, a few wildcards, such as inflation and political change, can rapidly change the situation. The market rates seem to be splitting between the types of risk as carriers tighten up on underwriting. The better-quality risks will see low to moderate rate increases, whereas the more challenging risks will continue to see higher rate increases. This is especially true for umbrella, excess coverage, and homeowners. Basic homeowners coverage and auto liability (both personal and commercial) will most likely see modest rate increases. However, a catastrophe-exposed homes will see significant rate increases. Workers’ compensation was the outlier with rates in many states dropping during 2021. Employees working remotely during the year seems to be a key factor with that rate trend, although the potential of COVID-19 related losses has created uncertainty in the market. It does appear rates will flatten out with some modest rate increases expected during 2022. Trends and current conditions are indicating 2022 will bring some stability to the marketplace and lower rate increases for most insurance buyers. However, that position is very vulnerable to a significant swing if one or two variables change during the year. Less attractive risks will continue to be hit hard.
3. 2022 M&A Activity and Pricing
The current prices paid by publicly trad-
ed brokers, large regionals and agencies funded by private equity firms are already extremely high and will likely continue to be high for the valuable, desirable firms. Since the supply is dwindling, the prices may be even higher for those that remain if they fit the profiles of the key buyers today. As long as insurance agencies remain profitable, there will be buyers. What might put a damper on some of the acquisition activity, is the potential increase in federal taxes on the transaction that could occur as early as the first quarter of 2022, if President Biden has his way. (See the tax section of this article.) Inflation is also increasing greatly, which may put a damper on transactions occurring. M&A activity is again expected to continue during 2022, according to our discussions with key acquirers. Here are some of their responses: • According to Clark Wormer, M&A director for HUB International, HUB has brought on more than 70 merger partners in 2021 and hopes to continue this in 2022. HUB has “bestin-class tools, resources, expertise and technology,” which they believe merger partners are seeking. • IMA is a newer buyer to the space over the past two years and this past year did a great job with some very astute acquisitions in California and Oregon. They closed nine transactions and expect to do several more in 2022. • Inszone is very aggressive and is also a relatively new buyer on the scene. It acquired 25 to 30 firms in 2021 and anticipates doing 50 to 60 acquisitions in 2022. • Foundation Risk Partners is a new buyer since November of 2017. This past year the firm made over 30 acquisitions and will continue that trend in 2022. The company is very competitive and easy to work
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Idea Exchange: Minding Your Business continued from page 45 with and brings some great synergies to acquired agencies. • A nice mid-size national broker, Risk Strategies Company, based in Boston, closed 29 transactions in 2021, which was their biggest year of M&As. Risk Strategies expects to do quite a few more in 2022, but not at this same level due to inflationary pressures and some undisciplined competitor buyers out there. They are more selective in buying agencies with specific niches, like employee benefits, healthcare, real estate, and transportation agencies. • Another privately held broker we work with is Heffernan Insurance Brokers. Their main offices are based in Portland, Oregon; Phoenix, Arizona; St. Louis, Missouri; and now Philadelphia, Pennsylvania, which they would like to add to. They are also interested in expanding into new regions. They made 18 acquisitions in 2021 and plan on at least 12 in 2022. • 2021 was a record year for Acrisure. They also made further investments in technology, data analytics and AI to complement new verticals in Asset Management, Real Estate Services and Cyber Services. Acrisure completed 139 transactions in 2021 and saw revenues reach $3.3 billion. Management expects to do a similar number in 2022. By year end, Acrisure will have also completed three specialty wholesaler acquisitions. • BroadStreet Partners, NFP, High Street and Alera, as well as other newer organizations, including World Insurance Associates, Relation and Patriot Growth Insurance Services are funded by private equity and venture capitalists. They continue to aggressively solicit and buy independent agencies and have large amounts of capital to pay well. • Private equity firms have been buying up insurance agencies for their investors. This makes a lot of sense because the return on investment is typically 20% to 30% or more, which is greater 46 | INSURANCE JOURNAL | DECEMBER 20, 2021
than most other available investments today. Despite the pandemic, PE firms are often still paying typically eight to nine times EBITDA as down payments for a well-run agency. In addition, there are usually earn-out bonuses that can also be significant as a multiple of EBITDA or topline. When the value is translated to a multiple of revenue, this means 2.5 to 3.25 times revenue. Most down payments are still about 80% to 90% of the price, with an earn-out over one to two years, especially now due to COVID. Usually, 10% to 20% of transactions also allow sellers to obtain some of the acquirer’s stock upfront or on the earn-out. Sometimes the stock can be used for those perpetuation candidates that the seller and buyer want to remain to have equity. In this way, they feel a part of it and have some skin in the game to stay on over many years after the key owners retire. Smaller books are purchased at around five to seven times EBITDA. However, there aren’t many books or agencies today that do not command at least two times revenues. Peer Acquisitions There will continue to be a price differential between those that receive offers
from the “well-funded” buyers and those that sell internally or to local competitors. Local peer buyers and internal buyers cannot easily compete at these high prices and multiples since they usually need to pay out of cash flow. However, some independents prefer not to sell to a much larger, often publicly traded firm. There is often pressure to produce and write larger accounts. In addition, producers in these acquired agencies usually have to write commercial lines and benefits accounts that are over $5,000 in commission or even more for other acquirers in order to get paid. On the other hand, there are other acquirers that leave the agency alone, except for providing markets, accounting and HR support. They don’t even change the seller’s name — such as Acrisure, Foundation Risk and BroadStreet.
4. Internal Perpetuation Can be Difficult
The terms for internal purchases are still typically 10% to 30% down, with the buy-out over five to 10 years. The number of years the purchase is paid out depends on the agency’s cash flow and whether or not the internal buyer has any money of their own. An internal buy-out rarely has an earn-out
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component, so the value should be conservative, to not jeopardize the internal buyer being able to use the agency’s cash flow to pay the loan off over time. Buyers often want the retiring owners to move on after a few years, so they can manage the firm without the previous owner's influence, and use their compensation and perks. If an owner sells internally, it is usually for less than the value of an external sale. There is a risk that the internal candidates might not work out, and they often don’t have any money, or have very little money, to do a buy-out. Often the retiring principal needs to finance the deal for the internal candidate. Oak & Associates highly recommends that the internal buyers get an SBA loan for 10 years, so the retiring shareholders don’t have to worry about getting paid. It is also recommended that all owners of internal sales should look at whether a GRAT would work if the owners are still healthy. There is a minimum payout of five years but both principal and interest can be deducted. It is often hard for small- and medium-sized independent agencies to perpetuate internally. The next generation often does not have the management and sales skills set to be able to retire the majority owner. In some cases, there are not perpetuation candidates at all. If this is the case, an external sale makes a lot more sense.
5. Tax Law Changes Likely
With the Democrats now in control of
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6. COVID 19
Congress, there is no guarantee that the lower tax structure of the previous administration will continue. For agency owners, this also includes whether or not the capital gains tax will remain at its current low federal rate of 15% to 20% or change to perhaps 39.6%. What is proposed is that at a sale value of over $1 million, the capital gains rate is eliminated and instead a much higher ordinary income tax rate would be put in place, perhaps 39.6% versus the current 34.6% rate. Many agencies that were concerned about higher taxes, insisted on selling in 2021 to avoid this concern. There is also a strong possibility that the state income tax rates are going up, such as in California with the move to more than 16%. In addition, personal income taxes, especially in the higher brackets, are predicted to rise substantially because of stimulus funding and now infrastructure packages that were approved.
The COVID-19 pandemic was the defining factor in 2020, and it continues to play a major role in 2021, largely due to the spread of the Delta variant. Now, with a new strain called the “Omicron” variant, it is likely that this will cause more fear among people to return to work, travel, socialize and remove their masks in 2022. Many state orders that prohibited gatherings and forced nonessential businesses to close or switch to remote work, have eased. Companies had to comply with these orders while also trying to stay in business, keep their customers and workers safe, and avoid lawsuits. Not all of them succeeded. Our nation has never experienced anything like the shutdowns, and our insurance industry has also been greatly impacted, not just by people not being able to go into work, but from the impact it’s had on insureds. The key industries most affected have been restaurants, entertainment risks, schools and non-profits. Payrolls have been affected for several other types of clients. If someone gets COVID at work, the legislators have now deemed this to be a workers’ compensation claim, so there is coverage for those employees. This has made employers more cautious about workplace COVID standards and limiting the number of people allowed back to work. Those who refuse to get vaccinated continue to lose their jobs in many industries, such as in healthcare and education,
continued on page 48
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Idea Exchange: Minding Your Business continued from page 47 as well as in large corporations. This may change on a state-by-state basis, which often is dictated by politics.
7. Natural Disasters’ Impact on Insurance
Natural disasters and severe weather are on the rise. Insurance companies tighten their underwriting and raise prices with disasters, whether it is fires in the Pacific Northwest and California, hurricanes in the Southeast, or tornadoes all over the Midwest and South. There are often non-renewals as well, and legislators don’t usually allow this without an adequate amount of time for non-renewal. But this has no longer been the case, many agencies get non-renewals on a monthly basis from some carriers. Insurance agencies can help educate their clients on how they can mitigate risks to fires, floods, hurricanes and tornadoes. We advise agencies to review with the client the limitations of their current coverage and offer any new options available. People will still need insurance, despite the regular threat of natural disasters Agents’ E&O exposure and coverage are at stake, so producers need to make sure the insureds know that the limits and coverages are not what they were with preferred carriers before.
8. Health Care Act Legislation
From a big picture perspective, not much changed during 2021 to the Affordable Care Act (ACA), although rules and limits were revised. Further tweaks to the rules will kick in during 2022, including a reversal of a few changes made during the Trump administration. Changes include the cap to out-ofpocket expenses slightly increasing to $8,700 for a single person and $17,400 for a family. Open enrollment is extended to January 15 and special enrollment period eligibility terms will expand for people with life-changing events. For 2022, applicable large employer’s health coverage is 48 | INSURANCE JOURNAL | DECEMBER 20, 2021
considered affordable if the employee’s required contribution to the plan does not exceed 9.61% of the employee’s household income for the taxable year, which decreased from 9.83% for 2021. Rules and regulations covering the ACA and the overall health insurance marketplaces/exchanges are updated. Some experts say that the update process for 2022 resulted in several favorable changes for consumers or rolled back proposed changes that would have negatively impacted consumers. The impact of COVID-19 on health care will cascade into 2022 and beyond. Not only the direct impact due to the disease, but the postponement of treatment for other diseases will have an effect going forward. On the other hand, COVID-19 does significantly result in death of the elderly and those with significant co-morbidities, which will lessen the burden on the healthcare system in the short term. The cost for health care in the United States crept up to about 18% of the economy in 2020, which has been a steady but small increase since 2005 when it was 16% of the economy. In 1960, healthcare costs accounted for approximately 5% of
the U.S. economy. Healthcare costs going forward in 2022 will have several offsetting factors, such as lower costs due to the increase of telemedicine and higher costs for drug coverage. 2022 will be a year of re-alignment in the healthcare industry as the world moves past COVID-19.
Summary
Being proactive and knowing how current trends will affect the firm is the first step. Managing the agency in a way that exploits these trends will allow the firm to succeed. Agency owners also need to establish business and marketing plans to stay ahead of the competition. Oak & Associates’ website (www.oakandassociates.com) offers free downloadable Sales and Marketing or Business Planning templates for your use. Oak is the founder of the consulting firm, Oak & Associates, based in Northern California and Central Oregon. Schoeffler is an associate of the firm. Oak & Associates specializes in financial and management consulting for independent insurance agencies, including valuations, mergers acquisitions, sales and marketing planning as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com. INSURANCEJOURNAL.COM
Idea Exchange: Best Practices continued from page 39 Employers can work with their human resources department to create a plan to help employees feel at ease. One idea is to offer an Employee Assistance Program (EAP). This gives employees access to services to help them with personal or work-related problems. It’s also imperative for supervisors and managers to provide training on how to recognize if a worker is struggling. A slip in performance may occur shortly after an employee returns to work, so managers need to be comfortable with having
a conversation to understand what’s going on.
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December 20, 2021
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Green Mountain Insurance Company Inc. Airport Road Berlin, VT 05601-0870
Accident Fund Insurance Company of America 200 N. Grand Ave Lansing, MI 48933
Preferred Professional Insurance Company 11605 Miracle Hills Drive, Suite 200 Omaha, NE 68154-4467
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
December 20, 2021
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December 20, 2021
Wysh Life and Health Insurance Company 720 E. Wisconsin Ave Milwaukee, WI 53202
Citizens Security Life Insurance Company 12910 Shelbyville Road, Suite 300 Louisville, KY 40243
Old Republic Insurance Company 631 Excel Drive, Suite 200 Mt Pleasant, PA 15666
The above company has made application to the Division of Insurance to amend their Life, Accident, and Health Insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Life, Accident, and Health Insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
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DECEMBER 20, 2021 INSURANCE JOURNAL | 49
Closing Quote
Confere Advanci IICF Inclusion in Insurance Forums ESTABLISHED AS THE IICF WOMEN IN INSURANCE CONFERENCE SERIES
Regional Fo
New York City, Charitable Giving in 2021: A Year of Rising to Meet New Challenges Chicago, June 2
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ringing people together to help others has historically By Bill Ross been a defining focus for charitable giving and volunteerism in the insurance industry. Though getting involved has become more complicated over the past year and nine months due to the COVID-19 pandemic, the industry’s support for those in need has not waivered. At the Insurance Industry Charitable Foundation (IICF), we see our role as that of a convener, bringing people together to discuss, advocate and advance critical issues shaping our industry, while also supporting the welfare of others through volunteerism and philanthropic measurement. From this unique perspective, we can see that, while the COVID-19 pandemic hampered our ability to meet face-to-face, it hasn’t limited philanthropic and volunteer opportunities. Instead, it has inspired additional giving and stimulated creativity in the ways we interact, volunteer and help each other. That’s because people learned that they could give their time and talents from their home or wherever they are and still make a profound impact. The state of philanthropy across our industry is strong and thriving — fueled by new energy from fresh faces and old friends. While I don’t have specific numbers to share at this
stage, we are seeing charitable giving across our industry continue to increase in 2021. IICF’s numbers alone show evidence of that. For example, our grant figures are healthy, leading to the aid of more than 30 programs, such as Feeding America, through the IICF Children’s Relief Fund in 2020 and 2021. Additionally, participation in this year’s IICF Week of Giving was quite robust, funds raised and attendance for our 2021 Northeast Annual Benefit Event have exceeded the most recent pre-pandemic year, and our campaigns, such as the Fill the Truck food drives have expanded to cover new territory where we had not previously had a presence. To top it all off, we’ve also seen additional board members step up, with dozens of new companies represented on IICF boards, bringing our total board member support to more than 600. That figure alone says a great deal about the heart and generosity of our industry.
DEI, CSR and ESG Are Complementary
As we reflect on 2021 and look to 2022, we also see that diversity, equity and inclusion (DEI), corporate social responsibility (CSR), and environmental, social and corporate governance (ESG) will continue to be priorities. This was demonstrated during the IICF International Inclusion in Insurance program when 1,500 people from eight countries gathered virtually for three days of growth, exploration and forging new pathways toward a fully inclusive future.
50 | INSURANCE JOURNAL | DECEMBER 20, 2021
The forum allowed us to exercise challenge that have important conversations promotes health, well-being Proceeds benefit non about how to develop diversity and team-building and fivebenefits host regions thr and inclusion, equity, accessithe IICF Children’s Relief Fund. Further, industry interest bility, innovation and wellness initiatives, effectively mobilizin the IICF’s Children’s Relief ing the industry as a positive Fund continues to stay strong. force for the future of work and This fund helps combat ongoing food insecurity in both the society. Conversations echoed U.S. and the United Kingdom. IICF’s belief that DEI, CSR and ESG are complementary. CSR, The efforts of our industry for example, goes beyond by IICF Join us as we Advance Registration toled open in helped Feeding doing the right things. It’s America serve 768,028 January 2022: andmeals our communities. about positioning everyone in to the School Pantry Program, inclusion.iicf.org future of inclusive wor the industry to be accountwhich works to alleviate child and other areas of bus able as individuals and hunger. as organizations. As people looked for IICF’s Inclusion in Insur ESG encompasses new ways to give back increated Insurance more than just virtually, IICF a Conferen environmental Virtual Volunteering exploring important o consciousness. Guide on our webevents of their kind t site, highlighting It includes how options for industry we assess our More than 8,000 wom professionals to volunteer strengths and weaknesses in events – join us for the while wearing masks and dealing with social trends, and connect, grow and exp respecting social distancing how that relates to the way guidelines. we manage our employees, Make an impact thr represent our industry and give What’s Next? back to our communities. Speaking for IICF, the Thank youhigh to our first 2022 A Continued Presence in Our level of interest in charitable Many mo Communities giving has inspired us to While the industry rolled explore how we can better up its collective sleeves to represent the entire industry brainstorm new ways to create in 2022 and beyond. While a brighter future for insurance the way we gather and give giving in 2021, we didn’t lose is far different now than sight of present needs in the pre-pandemic, the work we do communities where we live remains the same. Thank you and work. Companies across to the industry for embracing the industry continued to get its noble purpose to serve creative to find ways to serve those in need. And thank you their communities on their for trusting IICF to be the voice own and through IICF. that creates this sense of wellness for thousands of industry For example, the industry’s members and communities desire to provide hunger throughout the U.S. and UK. relief led to 3,000 people in 13 countries participating in our Ross is CEO of the Insurance Industry second annual International Charitable Foundation (IICF). Step Up Challenge, a six-week INSURANCEJOURNAL.COM
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